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13 December 2018

13/12/2018

Morning Chat & Market Data

Morning Chat


Confidence maybe: As European markets woke up yesterday, British Prime Minister Theresa May was facing a confidence vote.  As a key indicator, sterling rallied from the get-go rising ¢1.4 to $1.2660 at the London market close as May’s numbers looked enough.  The pound drifted back until the 9pm results proved there were more backers than back-stabbers; May won 200 to 117. A weak win, but enough, according to 1922 Committee rules, to close off a Tory party challenge for 12 months and push the pound to $1.2642 now. Meanwhile, the French left-wing parties launched a no-confidence motion against Macron’s government.

Well, nearly a gas: The S&P flitted in and out of positive territory for the year yesterday, but ended up only +0.54%, 22½ points shy of year-to-date positive. Nearly there. Initially investors were buoyed by news China could amend its “China 2025” plan calling for firms to transfer technology to enter its market. Trump did his bit saying he would get involved in the Huawei sanctions case if need be.  Plus there was good domestic news; US November inflation dropped back to 2.2%, the slowest pace since February, as a 4.2% decline in gasoline prices helped drive the rate lower. 

Sub-continent, superior production: India’s BSE Sensex 30 index curried favour with pukka gains yesterday rising 1.79%, one of the stronger rallies in Asian markets.  The move puts the index almost flat for the year in sterling terms at -0.60% and +5.09% in rupee.  Amidst the global hullabaloo, robust Indian Industrial Production data continued its 6-year improving trend, coming in at +8.1% year-on-year for October – notably higher than the 6.0% forecast and nearly double last month’s 4.5% – helped boost the index. Gains were reasonably broad-based, with manufacturing – representing more than three quarters the total - up 7.9%, mining up 7.0%, and the electric sector up 10.8%.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +10.82 (+0.96%) at 1,133 (YTD: -2.92%; 5YR: 49.6%)
MSCI AC World Equities (USD) up +87.54 (+1.09%) at 8,142 (YTD: -3.83%; 5YR: 40.9%)
Barclays Global Aggregate Bonds up +0.55 (+0.12%) at 473 (YTD: -2.51%; 5YR: 3.8%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +14.29 (+0.54%) at 2,651 (YTD: -0.84%; 5YR: 49.3%)
NASDAQ up +66.48 (+0.95%) at 7,098 (YTD: 2.82%; 5YR: 77.4%)
Euro STOXX 50 up +52.65 (+1.72%) at 3,108 (YTD: -11.30%; 5YR: 6.4%)
FTSE 100 up +73.25 (+1.08%) at 6,880 (YTD: -10.50%; 5YR: 6.8%)
CAC 40 up +103.25 (+2.15%) at 4,909 (YTD: -7.59%; 5YR: 20.9%)
DAX up +148.92 (+1.38%) at 10,929 (YTD: -15.39%; 5YR: 21.4%)
Nikkei 225  up +213.44 (+0.99%) at 21,816 (YTD: -4.17%; 5YR: 41.6%)
Hang Seng up +328.95 (+1.26%) at 26,516 (YTD: -11.38%; 5YR: 14.1%)
MSCI Emerging Markets up +14.09 (+1.46%) at 979 (YTD: -15.50%; 5YR: -1.2%) 
 
Selected Government Bond Yields
US 10 Year down 0.00 at 2.91 (began the year at 2.41; 5 years ago it was 2.86)
US 2 Year down 0.00 at 2.77 (began the year at 1.88; 5 years ago it was 0.32)
UK 10 Year up +0.09 at 1.28 (began the year at 1.19; 5 years ago it was 2.90)
Germany 10 Year down -0.14 at 0.26 (began the year at 0.42; 5 years ago it was 1.83)
France 10 Year down -0.05 at 0.72 (began the year at 0.78; 5 years ago it was 2.43)
Italy 10 Year down -0.43 at 3.11 (began the year at 2.01; 5 years ago it was 4.09)
Japan 10 Year down -0.08 at 0.04 (began the year at 0.04; 5 years ago it was 0.69)
Barclays EM Basket up +0.00 at 6.36 (began the year at 5.49; 5 years ago it was 5.77)
 
Selected Currencies
€/$ down 0.000 (0.00%) at 1.138 (YTD: -5.37%; 5YR: -17.1%)
£/€ down +0.001 (-0.05%) at 1.111 (YTD: -1.23%; 5YR: -6.9%)
£/$ down -0.001 (-0.06%) at 1.264 (YTD: -6.52%; 5YR: -22.4%)
$/¥ up -0.22 (+0.19%) at 113.41 (YTD: 0.73%; 5YR: 9.0%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.20 (+0.34%) at 59.35 (YTD: -11.18%; 5YR: -45.3%)
WTI Crude ($/bbl) down -0.50 (-0.97%) at 51.15 (YTD: -15.34%; 5YR: -47.5%)
Gold ($/ozt) up +0.50 (+0.04%) at 1246.17 (YTD: -4.37%; 5YR: 0.6%)
Copper ($/mt) down -28.00 (-0.45%) at 6140.00 (YTD: -15.28%; 5YR: -15.0%)
 
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