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14 August 2019

14/08/2019

Market Data and Morning Chat

Morning Chat

That was better: Guess what? Yup, tariffs news was again moving the market. This time US Trade Representative Robert Lighthizer announced the 10% tariffs effective from September 1 will be delayed to December 15 for various goods (or scrapped altogether for some like baby seats) including lap tops, cell phones, computers, some toys including games consoles and some clothes. Maybe Bob’s thinking about his Xmas shopping already. Equity markets raced up 1 to 2¼% – powered unsurprisingly by tech names like Micron, Lam Research and Apple – to the highs of last week while safe-havens like gold fell. Oh, Argentina rallied too!

G’is a job, mate: The UK’s Office of National Statistics released June’s employment numbers and depending on your leanings, you could call it glass half-empty or glass half-full. The empty? The unemployment rate slipped to 3.9% from 3.8% last month. However, the cause was the inactivity rate falling to a record low 20.7% as 90,000 more individuals shifted from inactivity to unemployment. Oh, and vacancies also declined. The full? Employment’s a record 32.81million on a robust 115,000 quarterly increase and wage growth ex bonuses accelerated to +3.9% (+1.9% after inflation) with gains across all sectors. Sounds more like glass full.

Meanwhile, in Germany: At 7am today Germany announced their Q2 GDP numbers. The analyst consensus called for -0.1% and they were right. There had been some concern that it could be lower. For a start, the auto sector has been sluggish with diesel sales tumbling and the manufacturing PMI below 50 for some time. At least there finally seems to be some recognition by Angela Merkel’s government of the weak conditions. Speaking yesterday, Merkel admitted Germany was “heading into a difficult phase” and that her government “will react depending on the situation”. Given her polling results a reaction is needed.

Boeing’s 737Max grounding puts profits at Norwegian airways, Tui & Menzies into holding pattern
CBS (+1.4%) and Viacom (-5.6%) agree $28billion tune-in 13 years after they split
US core inflation (ex food & energy) rises to 2.2% helping push overall inflation closer to target

A quick foreshadowing. Summer is a time for holidays and the Morning Chat will take a two week hiatus from Friday, returning, fittingly, on Labour Day, September 2nd.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +9.50 (+0.77%) at 1,238 (YTD: 14.26%; 5YR: 48.3%)
MSCI AC World Equities (USD) up +72.12 (+0.81%) at 8,956 (YTD: 15.24%; 5YR: 41.0%)
Barclays Global Aggregate Bonds down -1.35 (-0.26%) at 512 (YTD: 6.86%; 5YR: 7.7%)

Selected Equity Indices (Capital returns)
S&P 500 up +43.23 (+1.50%) at 2,926 (YTD: 16.73%; 5YR: 49.7%)
NASDAQ up +152.95 (+1.95%) at 8,016 (YTD: 20.81%; 5YR: 80.0%)
Euro STOXX 50 up +30.61 (+0.92%) at 3,357 (YTD: 11.85%; 5YR: 9.8%)
FTSE 100 up +24.18 (+0.33%) at 7,251 (YTD: 7.77%; 5YR: 8.5%)
CAC up +52.76 (+0.99%) at 5,363 (YTD: 13.37%; 5YR: 27.5%)
DAX up +70.45 (+0.60%) at 11,750 (YTD: 11.28%; 5YR: 27.4%)
Nikkei 225 up +199.69 (+0.98%) at 20,655 (YTD: 3.20%; 5YR: 34.9%)
Hang Seng up +125.93 (+0.50%) at 25,407 (YTD: -1.70%; 5YR: 2.4%)
MSCI Emerging Markets down -5.61 (-0.58%) at 969 (YTD: 0.32%; 5YR: -9.7%)

Selected Government Bond Yields
US 10 Year down -0.03 at 1.67 (began the year at 2.68; 5 years ago it was 2.40)
US 2 Year down -0.03 at 1.64 (began the year at 2.49; 5 years ago it was 0.42)
UK 10 Year up +0.00 at 0.49 (began the year at 1.28; 5 years ago it was 2.44)
Germany 10 Year down -0.01 at -0.62 (began the year at 0.24; 5 years ago it was 1.02)
France 10 Year down -0.01 at -0.33 (began the year at 0.70; 5 years ago it was 1.40)
Italy 10 Year down -0.05 at 1.57 (began the year at 2.74; 5 years ago it was 2.66)
Japan 10 Year up +0.04 at -0.20 (began the year at -0.01; 5 years ago it was 0.50)
Barclays EM Basket down 0.00 at 5.55 (began the year at 6.22; 5 years ago it was 5.36)

Selected Currencies
$ strengthened +0.0004 versus € (+0.04%) at 1.1176 ($: YTD: 2.41%; 5YR: 16.4%)
€ weakened -0.0002 versus £ (+0.02%) at 1.0791 (€: YTD: 3.14%; 5YR: 15.7%)
$ strengthened +0.0002 versus £ (+0.02%) at 1.2060 ($: YTD: 5.38%; 5YR: 27.7%)
¥ strengthened +0.1800 versus $ (+0.17%) at 106.3900 (¥: YTD: -3.07%; 5YR: -3.6%)

Selected Commodities
Brent Crude ($/bbl) down -0.14 (-0.23%) at 60.64 (YTD: 14.05%; 5YR: -39.8%)
WTI Crude ($/bbl) up +2.17 (+3.95%) at 57.10 (YTD: 25.74%; 5YR: -41.5%)
Gold ($/ozt) down -3.40 (-0.23%) at 1498.15 (YTD: 16.82%; 5YR: 14.1%)
Copper ($/mt) up +86.50 (+1.51%) at 5828.50 (YTD: -2.29%; 5YR: -15.3%)

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