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13 August 2019

13/08/2019

Market Data and Morning Chat

Morning Chat

Nope, not a good day: Well, given the weak sentiment closing out last week, it wasn’t a big surprise the equity weakness would continue. There was little besides better-than-expected Chinese vehicle sales numbers to give anything to cheer about, and plenty to feel frustrated by – little trade talks (yes, them) news, the Italian political upheaval, and the widening US budget deficit (even if it was expected). The result? Equities traded into the red to start the week, falling about ½% in Europe and 1-1½% in the US on low volumes. Still, today’s UK employment and US inflation data might help.

Let’s cry for you Argentina: The truth is, he hasn’t lost yet, these could just be the wild days, but Argentina’s conservative President Mauricio Macri was heavily trounced in the presidential primaries. The vote is a beauty parade audition for the October 27thelection, and Macri’s 32.1% heavily trails Mr Fernández left-wing alliance’s 47.7%. The shocking result sent the Argentine stock exchange tumbling 37.0%, the peso down 15% against the dollar, and the country’s Euro-denominated debt yield to rise by 3% over concerns that Macri’s ouster could end Argentina’s austerity-led recovery. Macri just needs to hope voters don’t keep their distance.

Summertime, and the earnin’ is easy: Oh, your revenues are rich and your guidance good-lookin’ – what every CEO hopes. This earnings season – now over 90% done – has been reasonable for earnings beats. An above-average 75% of companies bested mostly negative estimates by more than 5½%, with the actual 0.7% earnings slippage much better than the expected 2.6% decline. Moreover, while not rich, revenue growth has been just over 4% fed by decent domestic trends as US domestic-facing companies fare better than global ones. On the downside, more and more companies – particularly industrials – are citing less attractive-looking tariff concerns, especially in guidance.

… and today? Asia’s down, with European futures slightly weaker and US futures looking positive
Jethro-1, Tullow’s bumper new Guyana well means more than whistling Dixie with shares up 19.8%
Rolls Royce shares rev down 3.5% as parts not superfluous to function rain from an engine in flight.
US 30-year bond yield now only 0.0179% above 2016’s all-time record low 2.0882% yield.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -10.00 (-0.81%) at 1,228 (YTD: 13.38%; 5YR: 47.6%)
MSCI AC World Equities (USD) down -74.32 (-0.83%) at 8,884 (YTD: 14.32%; 5YR: 40.4%)
Barclays Global Aggregate Bonds up +1.77 (+0.35%) at 513 (YTD: 7.15%; 5YR: 8.2%)

Selected Equity Indices (Capital returns)
S&P 500 down -35.56 (-1.22%) at 2,883 (YTD: 15.01%; 5YR: 48.1%)
NASDAQ unchanged 0.00 (0.00%) at 7,863 (YTD: 18.51%; 5YR: 77.3%)
Euro STOXX 50 down -7.19 (-0.22%) at 3,327 (YTD: 10.83%; 5YR: 8.8%)
FTSE 100 down -27.13 (-0.37%) at 7,227 (YTD: 7.41%; 5YR: 8.6%)
CAC down -17.61 (-0.33%) at 5,310 (YTD: 12.25%; 5YR: 26.6%)
DAX down -14.12 (-0.12%) at 11,680 (YTD: 10.61%; 5YR: 27.0%)
Nikkei 225 down -229.38 (-1.11%) at 20,455 (YTD: 2.20%; 5YR: 34.9%)
Hang Seng down -460.90 (-1.78%) at 25,364 (YTD: -1.86%; 5YR: 1.9%)
MSCI Emerging Markets down -6.72 (-0.68%) at 974 (YTD: 0.90%; 5YR: -9.0%)

Selected Government Bond Yields
US 10 Year down -0.02 at 1.62 (began the year at 2.68; 5 years ago it was 2.42)
US 2 Year down -0.02 at 1.56 (began the year at 2.49; 5 years ago it was 0.41)
UK 10 Year up +0.01 at 0.49 (began the year at 1.28; 5 years ago it was 2.44)
Germany 10 Year up +0.08 at -0.51 (began the year at 0.24; 5 years ago it was 1.03)
France 10 Year up +0.04 at -0.25 (began the year at 0.70; 5 years ago it was 1.43)
Italy 10 Year down -0.15 at 1.55 (began the year at 2.74; 5 years ago it was 2.71)
Japan 10 Year up +0.02 at -0.20 (began the year at -0.01; 5 years ago it was 0.51)
Barclays EM Basket down -0.05 at 5.55 (began the year at 6.22; 5 years ago it was 5.39)

Selected Currencies
$ strengthened +0.0015 versus € (+0.13%) at 1.1197 ($: YTD: 2.23%; 5YR: 16.3%)
€ unchanged 0.0000 versus £ (0.00%) at 1.0772 (€: YTD: 3.32%; 5YR: 15.9%)
$ strengthened +0.0017 versus £ (+0.14%) at 1.2061 ($: YTD: 5.37%; 5YR: 27.8%)
¥ strengthened +0.0500 versus $ (+0.05%) at 105.2800 (¥: YTD: -4.16%; 5YR: -2.7%)

Selected Commodities
Brent Crude ($/bbl) down -0.09 (-0.15%) at 58.14 (YTD: 9.35%; 5YR: -43.8%)
WTI Crude ($/bbl) up +0.43 (+0.79%) at 54.93 (YTD: 20.96%; 5YR: -43.6%)
Gold ($/ozt) up +12.48 (+0.83%) at 1523.67 (YTD: 18.81%; 5YR: 16.1%)
Copper ($/mt) down -13.00 (-0.23%) at 5742.00 (YTD: -3.74%; 5YR: -17.6%)

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