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12 February 2019

12/02/2019

Market Data and Morning Chat

Morning Chat

Can you have it both ways? European markets generally closed 1% or so higher yesterday (DAX +1.0%, CAC +1.1%, IBEX +0.9%). The reason? Media reports cited optimism about the ongoing US-China trade talks. So, they’re making good headway then? Well, consider, the S&P was only +0.07% and the Nasdaq down 0.06%. Why? Reports opined investors were fretting over the trade deal. What we do know is talks appear in earnest but are progressing slowly to a tight schedule. Moreover, this week’s focus is the critical aspects of intellectual property rights. Finally, the outcome’s still uncertain but for now looks promising.

Not a lot in it: The Office of National Statistics preliminary Q4 GDP data release came in at +0.2%. Analysts – who on consensus have been spot-on for four quarters – missed by 0.1% with their 0.3% estimate. The mix probably put them off, with government spending & private consumption better than expected while business investment was unsurprisingly less. Did it matter? For the FTSE 100, up +0.8%, not so much – although it lagged continental peers. Bonds moved very little. The pound wobbled however. Trading at $1.2930 and €1.1425 just before the data was released, the pound fell to $1.2854 and €1.1401.

Brexit slowdown or Europe slowdown: Media reports put Britain’s +0.2% GDP slowdown down to increasing Brexit uncertainty. But note, service output is down after a strong World Cup boosted summer. Meanwhile, UK transport equipment output fell 2.7% driven by declining auto production over “regulatory changes and ongoing uncertainty over future diesel policy and taxation”. That echoes Germany’s weak auto sector which is expected to dampen their Q4 GDP to +0.1%. Consider also Italy saw -0.2% GDP growth. France only +0.3%, the EU +0.3% and Euro Area +0.2%. Brexit uncertainty sure, but the wider EU slowdown shows there’s more to it.

There’s news that the Democrats and Republicans have reached a deal “in principle” on border security and avoid a shutdown. Details are limited at this time but it has $1.375 billion for physical barriers which Trump may accept.

Market Data 

Selected Global Aggregates (Total returns, unhedged)

MSCI AC World Equities (Local) up +2.57 (+0.22%) at 1,165 (YTD: 7.53%; 5YR: 49.4%)

MSCI AC World Equities (USD) up +4.45 (+0.05%) at 8,354 (YTD: 7.50%; 5YR: 39.8%)

Barclays Global Aggregate Bonds down -1.61 (-0.33%) at 482 (YTD: 0.69%; 5YR: 5.0%)

Selected Equity Indices (Capital returns)

S&P 500 up +1.92 (+0.07%) at 2,710 (YTD: 8.10%; 5YR: 49.0%)

NASDAQ up +9.71 (+0.13%) at 7,308 (YTD: 10.14%; 5YR: 73.9%)

Euro STOXX 50 up +29.99 (+0.96%) at 3,166 (YTD: 5.47%; 5YR: 2.3%)

FTSE 100 up +57.93 (+0.82%) at 7,129 (YTD: 5.96%; 5YR: 6.8%)

CAC 40 up +52.83 (+1.06%) at 5,014 (YTD: 6.00%; 5YR: 16.5%)

DAX up +107.81 (+0.99%) at 11,015 (YTD: 4.32%; 5YR: 15.5%)

Nikkei 225 up +531.04 (+2.61%) at 20,864 (YTD: 4.24%; 5YR: 41.8%)

Hang Seng up +13.85 (+0.05%) at 28,158 (YTD: 8.95%; 5YR: 26.3%)

MSCI Emerging Markets down -0.62 (-0.06%) at 1,035 (YTD: 7.21%; 5YR: 8.6%)

Selected Government Bond Yields

US 10 Year up +0.02 at 2.67 (began the year at 2.68; 5 years ago it was 2.76)

US 2 Year up +0.01 at 2.50 (began the year at 2.49; 5 years ago it was 0.34)

UK 10 Year up +0.03 at 1.18 (began the year at 1.28; 5 years ago it was 2.82)

Germany 10 Year up +0.01 at 0.12 (began the year at 0.24; 5 years ago it was 1.69)

France 10 Year down 0.00 at 0.56 (began the year at 0.70; 5 years ago it was 2.30)

Italy 10 Year down -0.02 at 2.87 (began the year at 2.74; 5 years ago it was 3.73)

Japan 10 Year up +0.02 at -0.02 (began the year at -0.01; 5 years ago it was 0.61)

Barclays EM Basket up +0.02 at 6.03 (began the year at 6.22; 5 years ago it was 5.89)

Selected Currencies

$ weakened -0.0017 versus € (-0.15%) at 1.1288 ($: YTD: 1.43%; 5YR: 16.9%)

€ weakened -0.0001 versus £ (+0.01%) at 1.1401 (€: YTD: -2.38%; 5YR: 7.0%)

$ weakened -0.0018 versus £ (-0.14%) at 1.2869 ($: YTD: -0.97%; 5YR: 22.4%)

¥ weakened -0.0400 versus $ (-0.04%) at 110.5000 (¥: YTD: 0.76%; 5YR: -7.2%)

Selected Commodities

Brent Crude ($/bbl) up +0.24 (+0.39%) at 61.70 (YTD: 16.04%; 5YR: -43.1%)

WTI Crude ($/bbl) down -0.31 (-0.59%) at 52.41 (YTD: 15.42%; 5YR: -47.6%)

Gold ($/ozt) up +4.30 (+0.33%) at 1312.48 (YTD: 2.34%; 5YR: 1.6%)

Copper ($/mt) down -60.00 (-0.97%) at 6150.00 (YTD: 3.10%; 5YR: -13.1%)

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