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7 August 2019

07/08/2019

Market Data and Morning Chat

Morning Chat

Yuan for money, two for the show: Monday morning China shocked currency traders by allowing the yuan to depreciate to over 7 to the dollar. But, they backtracked Tuesday setting the official rate at 6.9683 after the US Treasury formally accused them of currency manipulation under IMF rules. Unless others join in, the US action is little more than showboating given the trade talks have been initiated. However, Tuesday’s move did allow equity markets some relief and they recovered lost ground as the day progressed. China did not, however, backtrack on their decision to stop agriculture purchases from the US.

A few other JOLTS helped too: There is no doubting the Yuan was the biggest influence on markets yesterday, but it was not the only factor. There were clues suggesting some acceleration in the auto sector, with Brazilian production and new registrations, Mexican exports and Russian vehicle sales all stronger than expected. Then, the API crude oil inventory data fell less than expected helping oil. Meanwhile, the biggie, the US Job Openings report held up better than forecasters expected with the layoffs and discharges rate steady and job openings little changed. Thus, coupled with the non-farms data, employment looks robust.

A little less pixie dust: Disney shares had flown up 2.6% by the close, but slipped back to 3.9% down afterhours landing at $136.4 (still +24.7% year-to-date). The trigger, and a trigger not a wonderful thing, was the weaker quarterly earnings numbers than hoped coming in at $1.35 a share versus $1.75 expected. The ongoing costs of the Fox merger and a weaker-than-hoped showing by the Fox movie “Dark Phoenix” were the main drag to numbers. More positively though, they announced the Disney+/ESPN+/Hulu package at $12.99 and a decent 24% year-on-year gain in cable revenues and 33% for the studios.

Gold shining as it nearly touches $1,500 an ounce for the first time in 6½ years
The German Markit construction PMI a few bricks short of expansion at 49.5, down from 50.0
Weight Watchers shares put on 15% afterhours on posting a beat-and-raise quarter

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +6.42 (+0.53%) at 1,224 (YTD: 12.95%; 5YR: 49.3%)
MSCI AC World Equities (USD) up +50.22 (+0.57%) at 8,844 (YTD: 13.79%; 5YR: 41.8%)
Barclays Global Aggregate Bonds up +0.04 (+0.01%) at 510 (YTD: 6.52%; 5YR: 7.7%)

Selected Equity Indices (Capital returns)
S&P 500 up +37.03 (+1.30%) at 2,882 (YTD: 14.96%; 5YR: 50.9%)
NASDAQ up +107.23 (+1.39%) at 7,833 (YTD: 18.05%; 5YR: 80.7%)
Euro STOXX 50 down -19.27 (-0.58%) at 3,292 (YTD: 9.67%; 5YR: 9.3%)
FTSE 100 down -52.16 (-0.72%) at 7,172 (YTD: 6.59%; 5YR: 8.7%)
CAC down -6.90 (-0.13%) at 5,235 (YTD: 10.65%; 5YR: 26.1%)
DAX down -90.55 (-0.78%) at 11,568 (YTD: 9.56%; 5YR: 28.0%)
Nikkei 225 down -68.75 (-0.33%) at 20,517 (YTD: 2.51%; 5YR: 34.7%)
Hang Seng down -16.07 (-0.06%) at 25,960 (YTD: 0.44%; 5YR: 6.4%)
MSCI Emerging Markets down -0.33 (-0.03%) at 973 (YTD: 0.71%; 5YR: -7.5%)

Selected Government Bond Yields
US 10 Year down -0.01 at 1.69 (began the year at 2.68; 5 years ago it was 2.41)
US 2 Year down -0.02 at 1.57 (began the year at 2.49; 5 years ago it was 0.43)
UK 10 Year up +0.00 at 0.52 (began the year at 1.28; 5 years ago it was 2.48)
Germany 10 Year up +0.03 at -0.51 (began the year at 0.24; 5 years ago it was 1.06)
France 10 Year up +0.02 at -0.25 (began the year at 0.70; 5 years ago it was 1.49)
Italy 10 Year up +0.03 at 1.55 (began the year at 2.74; 5 years ago it was 2.87)
Japan 10 Year down -0.01 at -0.20 (began the year at -0.01; 5 years ago it was 0.52)
Barclays EM Basket down 0.00 at 5.73 (began the year at 6.22; 5 years ago it was 5.45)

Selected Currencies
$ weakened -0.0006 versus € (-0.05%) at 1.1204 ($: YTD: 2.17%; 5YR: 16.1%)
€ strengthened +0.0005 versus £ (-0.05%) at 1.0845 (€: YTD: 2.63%; 5YR: 16.3%)
$ weakened -0.0001 versus £ (-0.01%) at 1.2151 ($: YTD: 4.67%; 5YR: 27.8%)
¥ strengthened +0.1800 versus $ (+0.17%) at 106.2400 (¥: YTD: -3.22%; 5YR: -3.9%)

Selected Commodities
Brent Crude ($/bbl) up +0.23 (+0.39%) at 58.66 (YTD: 10.33%; 5YR: -44.0%)
WTI Crude ($/bbl) down -1.06 (-1.94%) at 53.63 (YTD: 18.10%; 5YR: -44.7%)
Gold ($/ozt) up +13.70 (+0.93%) at 1488.10 (YTD: 16.04%; 5YR: 13.4%)
Copper ($/mt) down -2.00 (-0.04%) at 5683.00 (YTD: -4.73%; 5YR: -18.5%)

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