!css

12 August 2019

12/08/2019

Market Data and Morning Chat

Morning Chat

What a whipsaw week: Last week started under a tweet cloud after Donald Trump extended US tariffs against China and China responded by devaluing the yuan. Markets were thrown into disarray. Bond yields and equities indices slid and gold rallied. Yet when the official Chinese yuan was stabilised just below the psychologically important 7 to the dollar level, everything reversed. Indeed, by Thursday the S&P500 was looking at a positive week. Then, a muddled tweet over Huawei restrictions tipped markets down again. Over the week, equities lost ½ to 2%, 10-year bond yields fell about 0.1% and gold rallied 4%.

…and this week? Friday, the S&P500 registered its 8th day swinging over 1% – the jumpiest stretch since early 2019 – so it wouldn’t be surprising to see some degree of volatility this week. However, it’s also worth noting the volatility was mainly driven by trade issues, though a couple big economic data points also featured. This week sees some big data points too. UK unemployment (no change expected) and wages. US, UK & Chinese retail sales (the latter two expected lower) . Some industrial production data, and a biggie, German Q2 GDP (-0.1% expected. Yup, negative). Let’s just hope no tweets.

Oh, except for Italy: Italy saw more turmoil than others last week. The MIB equity index fell 3.4% – 2.5% on Friday alone. Italian 10-year bond yields bucked global trends rising 0.28%. Oh, and there wasn’t any significant economic data. The trigger was pulled when Matteo Salvini’s Lega Nord voted against their 5Star coalition partners followed by Friday’s no confidence vote call against Prime Minister Conte to doubtless spark an election. Salvini’s betrayal is not unexpected given the Lega’s strong polling (c38%) and the need to frame a budget. Not enough? Italian media also highlighted elevated concerns Salvini could push for Italian Euro withdrawal.

WPP shares add a decade-high 7.2% on better-than-expected sales with EBay and Facebook gains
SSE considering it’s a cracking idea for Ovo to shell out for SSE’s energy services division
Amgen’s (+6.0%) lawyers win a healthy victory in biosimilars case against Novartis (-0.9%)
KraftHeinz delayed and less-than-savory results leave a bad taste for investors as shares fall 6.1%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -6.63 (-0.53%) at 1,238 (YTD: 14.30%; 5YR: 49.8%)
MSCI AC World Equities (USD) down -47.43 (-0.53%) at 8,959 (YTD: 15.27%; 5YR: 42.4%)
Barclays Global Aggregate Bonds up +0.24 (+0.05%) at 511 (YTD: 6.78%; 5YR: 7.9%)

Selected Equity Indices (Capital returns)
S&P 500 down -19.44 (-0.66%) at 2,919 (YTD: 16.43%; 5YR: 50.9%)
NASDAQ down -80.02 (-1.00%) at 7,959 (YTD: 19.95%; 5YR: 81.3%)
Euro STOXX 50 down -41.64 (-1.23%) at 3,334 (YTD: 11.07%; 5YR: 10.3%)
FTSE 100 down -32.05 (-0.44%) at 7,254 (YTD: 7.81%; 5YR: 9.4%)
CAC down -60.04 (-1.11%) at 5,328 (YTD: 12.62%; 5YR: 28.0%)
DAX down -151.61 (-1.28%) at 11,694 (YTD: 10.75%; 5YR: 28.9%)
Nikkei 225 up +91.47 (+0.44%) at 20,685 (YTD: 3.35%; 5YR: 36.4%)
Hang Seng up +2.48 (+0.01%) at 25,942 (YTD: 0.37%; 5YR: 5.1%)
MSCI Emerging Markets down -3.10 (-0.32%) at 981 (YTD: 1.60%; 5YR: -7.8%)

Selected Government Bond Yields
US 10 Year down -0.02 at 1.72 (began the year at 2.68; 5 years ago it was 2.45)
US 2 Year down -0.02 at 1.62 (began the year at 2.49; 5 years ago it was 0.43)
UK 10 Year down -0.04 at 0.48 (began the year at 1.28; 5 years ago it was 2.48)
Germany 10 Year up +0.07 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 1.46)
Italy 10 Year down -0.26 at 1.55 (began the year at 2.74; 5 years ago it was 2.74)
Japan 10 Year down 0.00 at -0.20 (began the year at -0.01; 5 years ago it was 0.51)
Barclays EM Basket down -0.03 at 5.61 (began the year at 6.22; 5 years ago it was 5.40)

Selected Currencies
$ strengthened +0.0003 versus € (+0.03%) at 1.1208 ($: YTD: 2.13%; 5YR: 16.1%)
€ strengthened +0.0022 versus £ (-0.20%) at 1.0747 (€: YTD: 3.56%; 5YR: 17.1%)
$ strengthened +0.0027 versus £ (+0.22%) at 1.2045 ($: YTD: 5.50%; 5YR: 28.3%)
¥ strengthened +0.1500 versus $ (+0.14%) at 105.3900 (¥: YTD: -4.05%; 5YR: -3.0%)

Selected Commodities
Brent Crude ($/bbl) down -0.03 (-0.05%) at 58.00 (YTD: 9.08%; 5YR: -43.2%)
WTI Crude ($/bbl) up +1.96 (+3.73%) at 54.50 (YTD: 20.02%; 5YR: -44.1%)
Gold ($/ozt) up +3.18 (+0.21%) at 1495.49 (YTD: 16.61%; 5YR: 14.2%)
Copper ($/mt) down -43.00 (-0.74%) at 5755.00 (YTD: -3.52%; 5YR: -17.7%)

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