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18 February 2019

18/02/2019

Market Data and Morning Chat

Morning Chat

That’s how it ended, now what? Last week the US closed with trade talks progress, better than expected Empire manufacturing data but disappointing manufacturing & industrial production numbers. The S&P still rallied 1.09% Friday and 2.50% for the week – the 8th positive one in a row. This week we get more trade negotiations – hopefully still a positive – plus FOMC minutes – which if still dovish will help. There is a host of European and US Markit numbers which can help or hinder. In the UK there is the unemployment and wage data – fingers crossed – oh, and Germany’s final Q4 GDP data.

Derivative effects: Considering the weakness of some Continental economic data last week – shallow German GDP growth, declining Italian Industrial Production and an increased Spanish trade deficit for example – it might seem surprising that European equities had such a positive turn. The EuroStoxx 50 rallied 3.37%, DAX 3.60%, CAC 3.86% and Italian MIB 4.45% over 5 days. It seems the continuing flow of good news over the US-China trade talks – oh, and an agreement avoiding another shutdown – was more important. Don’t forget though, China growth has been weak too and a trade resolution helps Asia – a key destination of EU trade.

That’s not bad: In the UK, the FTSE100 was about 1¼% behind Continental markets over the week with the difference probably reflecting a perceived increased no-deal Brexit risk after Theresa May lost Thursday evening’s vote. Like Europe, bad economic data was ignored – but, wait, it wasn’t so bad. Yes, industrial and manufacturing production data lagged, but the trade balance improved, inflation eased, the GDP estimate was as expected – and better than Germany or Italy. Moreover, the week closed with January retail sales data coming in at +1.2% versus +0.2% expected. The economy is ok – it’s the future uncertainty that’s dragging.

Market Data

Selected Global Aggregates (Total returns, unhedged)

MSCI AC World Equities (Local) up +7.88 (+0.67%) at 1,188 (YTD: 9.69%; 5YR: 50.8%)

MSCI AC World Equities (USD) up +79.03 (+0.93%) at 8,546 (YTD: 9.96%; 5YR: 41.0%)

Barclays Global Aggregate Bonds up +0.19 (+0.04%) at 482 (YTD: 0.68%; 5YR: 4.2%)

Selected Equity Indices (Capital returns)

S&P 500 up +29.87 (+1.09%) at 2,776 (YTD: 10.72%; 5YR: 50.8%)

NASDAQ up +45.46 (+0.61%) at 7,472 (YTD: 12.62%; 5YR: 74.9%)

Euro STOXX 50 up +4.09 (+0.13%) at 3,245 (YTD: 8.13%; 5YR: 4.1%)

FTSE 100 down -8.18 (-0.11%) at 7,229 (YTD: 7.44%; 5YR: 6.4%)

CAC 40 up +8.89 (+0.17%) at 5,162 (YTD: 9.12%; 5YR: 19.2%)

DAX up +12.13 (+0.11%) at 11,312 (YTD: 7.13%; 5YR: 17.1%)

Nikkei 225 up +381.22 (+1.82%) at 21,282 (YTD: 6.33%; 5YR: 43.4%)

Hang Seng up +446.17 (+1.60%) at 28,347 (YTD: 9.68%; 5YR: 25.5%)

MSCI Emerging Markets down -8.56 (-0.82%) at 1,031 (YTD: 6.72%; 5YR: 7.5%)

Selected Government Bond Yields

US 10 Year unchanged at 2.66 (began the year at 2.68; 5 years ago it was 2.71)

US 2 Year unchanged at 2.51 (began the year at 2.49; 5 years ago it was 0.30)

UK 10 Year unchanged at 1.16 (began the year at 1.28; 5 years ago it was 2.75)

Germany 10 Year up +0.00 at 0.11 (began the year at 0.24; 5 years ago it was 1.67)

France 10 Year up +0.00 at 0.54 (began the year at 0.70; 5 years ago it was 2.25)

Italy 10 Year down -0.02 at 2.78 (began the year at 2.74; 5 years ago it was 3.56)

Japan 10 Year unchanged at -0.03 (began the year at -0.01; 5 years ago it was 0.60)

Barclays EM Basket down -0.01 at 6.04 (began the year at 6.22; 5 years ago it was 5.85)

Selected Currencies

$ weakened -0.0026 versus € (-0.23%) at 1.1299 ($: YTD: 1.34%; 5YR: 17.8%)

€ strengthened +0.0004 versus £ (-0.04%) at 1.1412 (€: YTD: -2.47%; 5YR: 6.4%)

$ weakened -0.0025 versus £ (-0.19%) at 1.2894 ($: YTD: -1.16%; 5YR: 22.8%)

¥ weakened -0.0500 versus $ (-0.05%) at 110.6100 (¥: YTD: 0.86%; 5YR: -7.4%)

Selected Commodities

Brent Crude ($/bbl) up +0.47 (+0.71%) at 66.48 (YTD: 25.03%; 5YR: -40.0%)

WTI Crude ($/bbl) up +1.18 (+2.17%) at 55.59 (YTD: 22.42%; 5YR: -44.6%)

Gold ($/ozt) up +0.32 (+0.02%) at 1321.87 (YTD: 3.07%; 5YR: 0.0%)

Copper ($/mt) up +51.00 (+0.83%) at 6188.00 (YTD: 3.74%; 5YR: -13.5%)

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