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5 August 2019

05/08/2019

Market Data and Morning Chat

Morning Chat

Some people are never satisfied: Investors – led by the bond market – have clamoured for a Fed rate cut. Last Wednesday the Federal Reserve obliged with a quarter point trim. Sure, bond yields fell – the US 10-year by 20 basis points, UK’s by 15 and Germany’s by 6 to minus1/2% – as bond investors saw further gains on ever shrinking yields, but equity investors were less rewarded. UK indices closed down around 2%, Europeans fell 3½ to 4½% and the US 2½ to 3% with much of the damage done Thursday & Friday, though Trump’s new trade tensions didn’t help either.

Franc-ly speaking safe-haven assets are golden: Seeing sterling drop from $1.24 to $1.21 and €1.11 to €1.09 as the holidays start is painful (although it does dampen international equity declines). However, safe havens have done ok in these choppy seas. The Swiss Franc has appreciated to €0.91, its strongest level in two years, moved back to the stronger end of its trading range with the dollar and risen to a 2½-year high versus sterling. Meanwhile, gold rallied back within a few dollars of its year-to-date high at $1,440 an ounce, a 12.4% gain this year (20.3% in sterling terms). Au-some!

Any good news? Right, so Trump’s renewed trade tensions are disheartening, but Friday’s US non-farm payrolls hit consensus bang-on, as did the Euro-Area Q2 flash GDP while European retail sales and Canadian GDP were better. Maybe this Friday’s UK GDP data (forecast at 0.0%) might be a surprising help too. Possibly the UK manufacturing output, German factory orders (forecast at -0.4% and 1.1% respectively) or a decent US JOLTS report could also emerge. We’ll also see various Markit Services surveys and the China trade figures and a recovery in any of these will offer a decent lift to market sentiment.

China’s Yaun falls below 7 to the dollar sending Asian markets into the red – red’s good luck isn’t it?
No sweetness only sour as Hong Kong’s Markit PMI slips to 43.8 from 47.9 on continuing unrest

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -15.75 (-1.24%) at 1,249 (YTD: 15.32%; 5YR: 51.3%)
MSCI AC World Equities (USD) down -96.66 (-1.06%) at 9,014 (YTD: 15.98%; 5YR: 43.5%)
Barclays Global Aggregate Bonds up +2.40 (+0.48%) at 507 (YTD: 5.90%; 5YR: 7.3%)

Selected Equity Indices (Capital returns)
S&P 500 down -21.51 (-0.73%) at 2,932 (YTD: 16.96%; 5YR: 52.7%)
NASDAQ down -107.05 (-1.32%) at 8,004 (YTD: 20.63%; 5YR: 83.9%)
Euro STOXX 50 down -113.91 (-3.26%) at 3,376 (YTD: 12.48%; 5YR: 9.9%)
FTSE 100 down -177.81 (-2.34%) at 7,407 (YTD: 10.09%; 5YR: 10.8%)
CAC down -198.41 (-3.57%) at 5,359 (YTD: 13.28%; 5YR: 26.6%)
DAX down -380.71 (-3.11%) at 11,872 (YTD: 12.44%; 5YR: 29.2%)
Nikkei 225 down -366.87 (-1.74%) at 20,720 (YTD: 3.52%; 5YR: 35.2%)
Hang Seng down -784.14 (-2.91%) at 26,134 (YTD: 1.12%; 5YR: 6.0%)
MSCI Emerging Markets down -20.80 (-2.03%) at 1,004 (YTD: 3.93%; 5YR: -5.6%)

Selected Government Bond Yields
US 10 Year down -0.08 at 1.77 (began the year at 2.68; 5 years ago it was 2.48)
US 2 Year down -0.08 at 1.64 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year down -0.04 at 0.55 (began the year at 1.28; 5 years ago it was 2.58)
Germany 10 Year down -0.03 at -0.53 (began the year at 0.24; 5 years ago it was 1.17)
France 10 Year down -0.02 at -0.26 (began the year at 0.70; 5 years ago it was 1.57)
Italy 10 Year down -0.04 at 1.50 (began the year at 2.74; 5 years ago it was 2.75)
Japan 10 Year down -0.03 at -0.20 (began the year at -0.01; 5 years ago it was 0.52)
Barclays EM Basket down -0.01 at 5.77 (began the year at 6.22; 5 years ago it was 5.46)

Selected Currencies
$ weakened -0.0014 versus € (-0.13%) at 1.1128 ($: YTD: 2.83%; 5YR: 16.8%)
€ strengthened +0.0038 versus £ (-0.35%) at 1.0890 (€: YTD: 2.20%; 5YR: 15.9%)
$ strengthened +0.0025 versus £ (+0.21%) at 1.2121 ($: YTD: 4.90%; 5YR: 28.2%)
¥ strengthened +0.7300 versus $ (+0.69%) at 105.8800 (¥: YTD: -3.57%; 5YR: -3.0%)

Selected Commodities
Brent Crude ($/bbl) down -0.29 (-0.47%) at 60.94 (YTD: 14.61%; 5YR: -41.3%)
WTI Crude ($/bbl) up +1.71 (+3.17%) at 55.66 (YTD: 22.57%; 5YR: -43.1%)
Gold ($/ozt) up +17.02 (+1.18%) at 1457.62 (YTD: 13.66%; 5YR: 13.1%)
Copper ($/mt) down -169.50 (-2.87%) at 5729.50 (YTD: -3.95%; 5YR: -19.0%)

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