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4 January 2019

04/01/2019

Morning Chat & Market Data

Morning Chat


Apple slices: CEO Tim Cook set a dour tone for markets yesterday – the S&P fell 2.48% – after paring Apple’s quarterly revenue outlook by $5 billion to $84 billion in Wednesday’s after-close update.  The core problem was reduced Chinese sales because of the US China trade war. The bruising news prompted a flash 4% rally in the trade-weighted Yen (in the end closing only 0.88% stronger) and left Apple to open down about 9% and close down 9.96%. Many Apple supply chain names were also hit significantly, hurt also by the US Manufacturing ISM coming in at 54.1 versus 57.5 expected.

Something better to build on: Apple’s news meant the FTSE 100 would open lower, but it still tried to rally three times yesterday finishing down only 0.62%.  After an initial drop, reasonable December Construction PMI data (52.8 versus 52.9 expected) underpinned a rebuild while Next’s positive trading statement was tailor-made to improve market sentiment.  Next, citing better-than-last-year Christmas sales that more than compensated for November’s weakness, helped sustain the gain – at least until the US open and Apple started trading. But there was still a little more medicine to lift health care stocks 1% and the index one more time…

…Especially when the drugs kicked in: When one of the largest companies on the planet issues bad news, other items can get missed… like Bristol-Myers Squibb’s massive $74 billion Celgene offer.  Celgene – a biopharma specialising in cancer and inflammation treatments – saw its share price spike 32.2% initially but slip back to close up 20.69% at $80.43. The offer - $50 cash and one Bristol Myers share – worth $95.12 at the close – would recoup most of 2018’s decline and was a shot in the arm for biotechs like Gilead (+2.85%) and Biogen (+0.76%). More, trade deal talks lifted futures too.

Nancy Pelosi was elected speaker of the US House of Representatives

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -16.68 (-1.54%) at 1,065 (YTD: -1.68%; 5YR: 35.8%)
MSCI AC World Equities (USD) down -114.13 (-1.47%) at 7,646 (YTD: -1.61%; 5YR: 27.6%)
Barclays Global Aggregate Bonds up +2.91 (+0.61%) at 482 (YTD: 0.60%; 5YR: 6.4%) 

Selected Equity Indices (Capital returns)
S&P 500 down -62.14 (-2.48%) at 2,448 (YTD: -2.35%; 5YR: 33.7%)
NASDAQ down -202.43 (-3.04%) at 6,464 (YTD: -2.59%; 5YR: 56.4%)
Euro STOXX 50 down -38.52 (-1.29%) at 2,955 (YTD: -1.56%; 5YR: -3.9%)
FTSE 100 down -41.57 (-0.62%) at 6,693 (YTD: -0.53%; 5YR: -0.6%)
CAC 40 down -77.90 (-1.66%) at 4,611 (YTD: -2.52%; 5YR: 8.6%)
DAX down -163.53 (-1.55%) at 10,417 (YTD: -1.35%; 5YR: 10.4%)
Nikkei 225  down -452.81 (-2.26%) at 19,562 (YTD: -2.26%; 5YR: 20.1%)
Hang Seng up +472.73 (+1.89%) at 25,537 (YTD: -1.19%; 5YR: 11.9%)
MSCI Emerging Markets down -6.09 (-0.64%) at 950 (YTD: -1.67%; 5YR: -3.1%) 
 
Selected Government Bond Yields
US 10 Year up +0.02 at 2.58 (began the year at 2.68; 5 years ago it was 2.99)
US 2 Year up +0.04 at 2.42 (began the year at 2.49; 5 years ago it was 0.40)
UK 10 Year down -0.02 at 1.19 (began the year at 1.28; 5 years ago it was 3.02)
Germany 10 Year down -0.24 at 0.16 (began the year at 0.24; 5 years ago it was 1.94)
France 10 Year down -0.11 at 0.66 (began the year at 0.70; 5 years ago it was 2.55)
Italy 10 Year down -0.70 at 2.84 (began the year at 2.74; 5 years ago it was 3.91)
Japan 10 Year down -0.17 at -0.04 (began the year at -0.01; 5 years ago it was 0.74)
Barclays EM Basket down 0.00 at 6.17 (began the year at 6.22; 5 years ago it was 5.86)
 
Selected Currencies
€/$ down +0.000 (+0.02%) at 1.140 (YTD: -0.45%; 5YR: -16.2%)
£/€ up 0.000 (+0.04%) at 1.110 (YTD: -0.31%; 5YR: -8.8%)
£/$ down +0.001 (+0.06%) at 1.265 (YTD: -0.75%; 5YR: -23.0%)
$/¥ down -0.11 (+0.10%) at 108.14 (YTD: -1.41%; 5YR: 3.4%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.90 (+1.65%) at 55.51 (YTD: 4.40%; 5YR: -47.9%)
WTI Crude ($/bbl) down +0.55 (+1.18%) at 47.09 (YTD: 3.70%; 5YR: -49.9%)
Gold ($/ozt) up -0.89 (-0.07%) at 1293.41 (YTD: 0.85%; 5YR: 4.6%)
Copper ($/mt) down -106.00 (-1.81%) at 5736.00 (YTD: -3.84%; 5YR: -21.6%)
 
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