!css

10 April 2019

10/04/2019

Morning Chat and Market data

Morning Chat 

Plane speaking: Yesterday wasn’t great for European markets; The FTSE100 closed down 0.43%, DAX 0.94% and CAC 0.63%. Disappointing, and guess the cause – trade tensions and tariffs. No, not US-China tariffs but between the US and EU. A significant trigger is US Trade Representative Lighthizer’s proposed list of EU products that could face new tariffs totalling $11billion knocking shares of aeronautical and drinks companies. EU subsidies to Airbus is the focus, which the WTO has said have an “adverse effect” on the US, but the move does come on the heels of a WTO ruling against Boeing. Must be coincidence.

Jolted over there too: It wasn’t great for the US either. The S&P500 slid 0.77% and Nasdaq Composite 0.56%. The Metals & Mining and Industrials sectors suffered declines of 2.56% and 1.40% respectively over concerns for reciprocal EU tariffs against the US in reply for the Airbus tariffs. But there was a bit more to trim enthusiasm. The IMF again lowered their global growth estimate, cutting to a below long-run average 3.3%.... over tariffs. Additionally, the US Job Openings and Labor Turnover Survey (JOLTS) fell to a disappointing 11-month low of 7.087million, 463,000, lower than expected because of fewer openings.

Hey, big hole, big hole Italiano, uh,oh,oh: Wait a minute, something's wrong… or could be. Recall the big Rome-Brussels showdown over the Italian budget last year. Paris rode to the rescue with a budget-blow-out promise to the Yellow Vests letting Italy get away with a 2.04% deficit target, Thought you’d remember. The problem is when the Italian Finance Ministry issues today’s update they’ll likely revise down the earlier growth forecast from 1.0% to something much less. Positive, but less. The OECD are forecasting 0.3%, the IMF 0.1%. THE Slower growth alongside delayed VAT hikes could leave a big budget hole.

EU expected to rule on extension application today.
Israeli exit polls suggest that Benny Gantz’s Blue & White party may beat Benjamin Netanyahu

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -4.72 (-0.38%) at 1,241 (YTD: 14.54%; 5YR: 57.1%)
MSCI AC World Equities (USD) down -38.25 (-0.43%) at 8,909 (YTD: 14.63%; 5YR: 46.7%)
Barclays Global Aggregate Bonds up +0.72 (+0.15%) at 489 (YTD: 2.02%; 5YR: 4.0%)

Selected Equity Indices (Capital returns)
S&P 500 down -17.57 (-0.61%) at 2,878 (YTD: 14.81%; 5YR: 57.0%)
NASDAQ down -44.61 (-0.56%) at 7,909 (YTD: 19.20%; 5YR: 95.1%)
Euro STOXX 50 down -20.84 (-0.61%) at 3,417 (YTD: 13.85%; 5YR: 8.4%)
FTSE 100 down -26.32 (-0.35%) at 7,426 (YTD: 10.37%; 5YR: 11.8%)
CAC 40 down -35.36 (-0.65%) at 5,436 (YTD: 14.92%; 5YR: 23.2%)
DAX down -112.83 (-0.94%) at 11,851 (YTD: 12.23%; 5YR: 25.3%)
Nikkei 225 down -115.02 (-0.53%) at 21,688 (YTD: 8.36%; 5YR: 51.7%)
Hang Seng down -26.45 (-0.09%) at 30,131 (YTD: 16.58%; 5YR: 29.9%)
MSCI Emerging Markets up +4.94 (+0.45%) at 1,093 (YTD: 13.22%; 5YR: 7.0%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.49 (began the year at 2.68; 5 years ago it was 2.65)
US 2 Year down -0.02 at 2.33 (began the year at 2.49; 5 years ago it was 0.35)
UK 10 Year down -0.01 at 1.10 (began the year at 1.28; 5 years ago it was 2.62)
Germany 10 Year up +0.00 at -0.01 (began the year at 0.24; 5 years ago it was 1.52)
France 10 Year down 0.00 at 0.34 (began the year at 0.70; 5 years ago it was 2.02)
Italy 10 Year down -0.02 at 2.40 (began the year at 2.74; 5 years ago it was 3.16)
Japan 10 Year down 0.00 at -0.06 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket down -0.01 at 5.99 (began the year at 6.22; 5 years ago it was 5.69)

Selected Currencies
$ strengthened +0.0001 versus € (+0.01%) at 1.1269 ($: YTD: 1.60%; 5YR: 18.9%)
€ weakened -0.0032 versus £ (+0.28%) at 1.1598 (€: YTD: -4.04%; 5YR: 4.2%)
$ weakened -0.0034 versus £ (-0.26%) at 1.3069 ($: YTD: -2.53%; 5YR: 22.1%)
¥ weakened -0.0200 versus $ (-0.02%) at 111.1500 (¥: YTD: 1.34%; 5YR: -8.7%)

Selected Commodities
Brent Crude ($/bbl) up +0.02 (+0.03%) at 70.57 (YTD: 32.73%; 5YR: -34.0%)
WTI Crude ($/bbl) down -0.42 (-0.65%) at 63.98 (YTD: 40.89%; 5YR: -38.2%)
Gold ($/ozt) up +0.25 (+0.02%) at 1304.32 (YTD: 1.71%; 5YR: -1.1%)
Copper ($/mt) up +12.00 (+0.19%) at 6487.00 (YTD: 8.75%; 5YR: -2.0%)

Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros