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7 December 2018

07/12/2018

Morning Chat & Market Data

Morning Chat

Sweet & Sour Chinese: European markets tumbled yesterday, with the FTSE 100 down 3.15%, France’s CAC -3.32% and Germany’s DAX -3.48%. The cause? The revelation that Wanzhou Meng, CFO of China’s Huawei – the world’s largest telecoms equipment maker – had been arrested in Canada December 1st, the same day President Trump was sitting down to lunch with President Xi in Argentina. The arrest was condemned by China and markets sold off assuming the loss of face for the Chinese would hinder trade negotiations. Yet China’s Ministry of Commerce reiterated they were still sweet on an agreement to end the tariff war. 

Did it rate a US sell-off? Short answer? Yes, but. US indices started the day in decline as the focus was on the arrest… and the increased US trade deficit data (highest in a decade)…  and the weak ADP employment data … and the failure of OPEC to agree a million barrel a day production cut. By 11:30am in New York the S&P was down by 2.8%. However, it turned sharply to close down only 0.15% (the Nasdaq closed up!) after a Wall Street Journal report noted the Federal Reserve was uncertain of their next move after December. Ah, the power of the press.

Fancy a Hamburger: 1,001 delegates gather in Hamburg today to elect the chairman of the ruling Christian Democratic Union party and likely next Chancellor.  Chancellor Angela Merkel’s presumed favourite is Annegret Kramp-Karrenbauer, general secretary of the party. More popular in general polls, her centrist position finds less favour with delegates. Then there is Friedrich Merz, an old rival of Merkel who wants to move the CDU to the right. He’s not as popular with the general public and gaffed campaigning, but older white male delegates and party grandee Wolfgang Schäuble support him. Lastly, outsider Jens Spahn is mostly being discounted.

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -12.36 (-1.07%) at 1,139 (YTD: -2.39%; 5YR: 48.3%)
MSCI AC World Equities (USD) down -71.42 (-0.86%) at 8,202 (YTD: -3.12%; 5YR: 39.8%)
Barclays Global Aggregate Bonds up +1.56 (+0.33%) at 473 (YTD: -2.35%; 5YR: 4.1%)
 
Selected Equity Indices
S&P 500 down -4.11 (-0.15%) at 2,696 (YTD: 0.84%; 5YR: 49.4%)
NASDAQ up +29.83 (+0.42%) at 7,188 (YTD: 4.13%; 5YR: 76.9%)
Euro STOXX 50 down -104.33 (-3.31%) at 3,046 (YTD: -13.07%; 5YR: 2.2%)
FTSE 100 down -217.79 (-3.15%) at 6,704 (YTD: -12.80%; 5YR: 2.3%)
CAC 40 down -163.91 (-3.32%) at 4,780 (YTD: -10.02%; 5YR: 15.8%)
DAX down -389.26 (-3.48%) at 10,811 (YTD: -16.31%; 5YR: 17.9%)
Nikkei 225  up +177.06 (+0.82%) at 21,679 (YTD: -4.77%; 5YR: 41.7%)
Hang Seng down -14.32 (-0.05%) at 26,142 (YTD: -12.62%; 5YR: 10.1%)
MSCI Emerging Markets down -22.98 (-2.29%) at 979 (YTD: -15.50%; 5YR: -2.3%)
 
Selected Government Bond Yields
US 10 Year down -0.02 at 2.88 (began the year at 2.41; 5 years ago it was 2.86)
US 2 Year down -0.01 at 2.75 (began the year at 1.88; 5 years ago it was 0.30)
UK 10 Year down -0.07 at 1.25 (began the year at 1.19; 5 years ago it was 2.90)
Germany 10 Year down -0.17 at 0.24 (began the year at 0.42; 5 years ago it was 1.84)
France 10 Year down -0.11 at 0.66 (began the year at 0.78; 5 years ago it was 2.44)
Italy 10 Year down -0.36 at 3.18 (began the year at 2.01; 5 years ago it was 4.17)
Japan 10 Year down -0.08 at 0.05 (began the year at 0.04; 5 years ago it was 0.66)
Barclays EM Basket down -0.01 at 6.33 (began the year at 5.49; 5 years ago it was 5.81)
 
Selected Currencies
€/$ down -0.002 (-0.15%) at 1.137 (YTD: -5.42%; 5YR: -17.0%)
£/€ down +0.001 (-0.04%) at 1.123 (YTD: -0.16%; 5YR: -6.2%)
£/$ down -0.002 (-0.19%) at 1.277 (YTD: -5.57%; 5YR: -21.8%)
$/¥ down -0.25 (+0.22%) at 112.79 (YTD: 0.19%; 5YR: 8.8%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.77 (-1.30%) at 58.45 (YTD: -12.53%; 5YR: -47.7%)
WTI Crude ($/bbl) down -1.40 (-2.65%) at 51.49 (YTD: -14.78%; 5YR: -47.3%)
Gold ($/ozt) up +1.60 (+0.13%) at 1239.35 (YTD: -4.89%; 5YR: 0.8%)
Copper ($/mt) down -105.00 (-1.70%) at 6070.00 (YTD: -16.24%; 5YR: -14.8%)
 
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return
 
SOURCES: BBC; The New York Times; FactSet; Al Jazeera; Financial Times; The Economist; Reuters; CNN; Wall Street Journal; CNBC; Google Finance; Seeking Alpha; The Idea Farm; Bloomberg, Twitter; Wikipedia; Investopedia; The Guardian; The Times of London; Google News; Numerous academic sources and journals; Trade bodies; Government institutions (e.g The Bank of England, The Federal Reserve).

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros