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22 January 2019

22/01/2019

Morning Chat & Market Data

Morning Chat

Not much has changed: Monday. Plan B day. More plan A1 day.  At 1530hrs, Prime Minster Theresa May spoke to Parliament. She stated the only way to avoid leaving the EU without a deal was, obviously, to have a deal.  Extending Article 50? The EU won’t extend if there isn’t another credible plan.  Moreover, she believes there isn’t a House majority for a second referendum and besides see the Commons duty is to implement the first referendum. She offered some cosmetic tweeks – workers’ rights and waiving settled status fees – and offered to consult, but noted Jeremy Corbyn unwillingness to engage.

It’s Europe’s fault: So, not much to say about how the US market’s fared yesterday – they were closed for Martin Luther King Day – but here in Europe we saw a modest sell-off with the EuroStoxx 50 down by 0.45% and the UK FTSE down 0.07%.  You might have expected the UK to have slipped further given the Brexit shenanigans, but it was the weakest link Friday.  Monday it was the IMF trimming its 3.7% 2019 global estimate by 0.2% to 3.5% because of weak consumer demand across Europe led by Germany and Italy. France’s yellow vest protests haven’t helped either

… ok, and Asia too: Given the China CSI 300 index was +0.55% yesterday, the slightly weaker China GDP data was not really unexpected.  Indeed, markets have seen signals growth was slowing including a slip in business confidence and manufacturing PMI.  Still, Chinese GDP rolled along at a slightly slower 6.4% versus 6.5 % last quarter – tough, eh? Ok, it is the slowest pace in 28 years – but that was when the economy was about a thirteenth its present size. The agricultural sectors were the laggards – especially grain production – but high-tech and strategic manufacturing increased 11.7%. No wonder Trump’s alarmed.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +0.75 (+0.07%) at 1,149 (YTD: 6.05%; 5YR: 44.9%)
MSCI AC World Equities (USD) up +0.39 (+0.00%) at 8,261 (YTD: 6.29%; 5YR: 36.4%)
Barclays Global Aggregate Bonds down -0.01 (0.00%) at 479 (YTD: 0.12%; 5YR: 5.3%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +34.75 (+1.32%) at 2,671 (YTD: 6.54%; 5YR: 44.8%)
NASDAQ up +72.77 (+1.03%) at 7,157 (YTD: 7.87%; 5YR: 69.4%)
Euro STOXX 50 down -9.85 (-0.31%) at 3,125 (YTD: 4.12%; 5YR: -0.8%)
FTSE 100 up +2.26 (+0.03%) at 6,971 (YTD: 3.60%; 5YR: 2.1%)
CAC 40 down -8.15 (-0.17%) at 4,868 (YTD: 2.90%; 5YR: 12.6%)
DAX down -69.34 (-0.62%) at 11,136 (YTD: 5.47%; 5YR: 14.6%)
Nikkei 225  down -96.42 (-0.47%) at 20,623 (YTD: 3.04%; 5YR: 30.4%)
Hang Seng down -259.21 (-0.95%) at 26,937 (YTD: 4.22%; 5YR: 16.7%)
MSCI Emerging Markets up +0.45 (+0.04%) at 1,018 (YTD: 5.47%; 5YR: 4.3%)
 
Selected Government Bond Yields
US 10 Year down -0.04 at 2.75 (began the year at 2.68; 5 years ago it was 2.87)
US 2 Year down -0.04 at 2.58 (began the year at 2.49; 5 years ago it was 0.40)
UK 10 Year down -0.03 at 1.32 (began the year at 1.28; 5 years ago it was 2.89)
Germany 10 Year down -0.17 at 0.24 (began the year at 0.24; 5 years ago it was 1.76)
France 10 Year down -0.14 at 0.64 (began the year at 0.70; 5 years ago it was 2.44)
Italy 10 Year down -0.79 at 2.76 (began the year at 2.74; 5 years ago it was 3.83)
Japan 10 Year down -0.14 at -0.01 (began the year at -0.01; 5 years ago it was 0.67)
Barclays EM Basket up +0.00 at 6.13 (began the year at 6.22; 5 years ago it was 5.77)
 
Selected Currencies
€/$ down -0.002 (-0.17%) at 1.135 (YTD: -0.90%; 5YR: -16.2%)
£/€ down +0.001 (-0.09%) at 1.133 (YTD: 1.80%; 5YR: -7.9%)
£/$ down -0.003 (-0.26%) at 1.286 (YTD: 0.91%; 5YR: -22.4%)
$/¥ down +0.24 (-0.22%) at 109.40 (YTD: -0.24%; 5YR: 4.6%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.69 (-1.11%) at 61.68 (YTD: 16.01%; 5YR: -43.7%)
WTI Crude ($/bbl) down +1.73 (+3.32%) at 53.80 (YTD: 18.48%; 5YR: -43.0%)
Gold ($/ozt) up +5.21 (+0.41%) at 1281.11 (YTD: -0.10%; 5YR: 3.6%)
Copper ($/mt) down -71.00 (-1.17%) at 5981.00 (YTD: 0.27%; 5YR: -18.5%)
 
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