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17 January 2019

17/01/2019

Morning Chat & Market Data

Morning Chat


Fuelledyou: After Tuesday night’s parliamentary extravaganza, UK equities were going to struggle to post gains; they rallied modestly over the day, but alone amongst big European markets closed down, falling 0.47%.  Yesterday’s UK inflation data, although all lower, were not enough at odds with expectations to move sentiment.  Still, numbers were good.  Consumer Price Inflation fell to 2.1% as forecast - just above the Bank of England target – with RPI only 2.7% versus 2.9% expected and output PPI 2.5% versus 2.9% expected.  Three quarters of the slowing was driven by the 6.4p a litre fall in average petrol prices.
 

Immovableforce, resistibleobjections: Indeed, UK assets ahead of last night’s confidence vote (Prime Minister May won 325 to 306), assumed her victory. Ok, equities were down, but bonds showed little anticipatory movement and sterling rallied to $1.2885.  What’s next? Discussions with senior parliamentarians, although Corbyn won’t join in unless May rules out no-deal first – the others at least would talk – but other Brexit options need the EU to budge. German newspaper Handelsblatt reported Germany, the Netherlands and others are considering a concession – only if Ireland agrees – so maybe, but EU officials later denied it. Second referendum? Possibly. For now, nothing’s changed.

Afew moreto bankon: The S&P Bank sector rallied 2.72% yesterday helping push the S&P up 0.22% on solid results from Bank of America (+7.16%), Goldman Sachs (+9.54%) and a couple regionals.  Ok, Bank of America saw a slide in fixed income trading (ditto Goldman), but equity trading helped cover the cracks as the $22.7 billion revenue net of interest expenses was toward the higher end of expectations. Earnings per share (eps) hit $0.71 versus the $0.63 expected.  Goldman Sachs also beat on net revenue with eps of $4.83 versus the $4.53 expected and equity trading up 17%.

China announced Vice Premier Liu He will attend the next round of trade talks highlighting China’s desire for a deal.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +2.72 (+0.24%) at 1,129 (YTD: 4.17%; 5YR: 42.8%)
MSCI AC World Equities (USD) up +12.05 (+0.15%) at 8,118 (YTD: 4.45%; 5YR: 34.5%)
Barclays Global Aggregate Bonds down -0.66 (-0.14%) at 481 (YTD: 0.39%; 5YR: 5.6%)
  
Selected Equity Indices (Capital returns)
S&P 500 up +5.80 (+0.22%) at 2,616 (YTD: 4.36%; 5YR: 42.3%)
NASDAQ up +10.86 (+0.15%) at 7,035 (YTD: 6.02%; 5YR: 67.6%)
Euro STOXX 50 up +9.17 (+0.30%) at 3,077 (YTD: 2.53%; 5YR: -2.4%)
FTSE 100 down -32.34 (-0.47%) at 6,863 (YTD: 2.00%; 5YR: 0.5%)
CAC 40 up +24.57 (+0.51%) at 4,811 (YTD: 1.69%; 5YR: 11.2%)
DAX up +39.45 (+0.36%) at 10,931 (YTD: 3.53%; 5YR: 12.2%)
Nikkei 225  down -40.48 (-0.20%) at 20,402 (YTD: 1.94%; 5YR: 29.7%)
Hang Seng down -116.67 (-0.43%) at 26,785 (YTD: 3.64%; 5YR: 15.8%)
MSCI Emerging Markets up +4.28 (+0.43%) at 1,009 (YTD: 4.53%; 5YR: 3.8%) 
 
Selected Government Bond Yields
US 10 Year down -0.02 at 2.71 (began the year at 2.68; 5 years ago it was 2.82)
US 2 Year down -0.01 at 2.53 (began the year at 2.49; 5 years ago it was 0.37)
UK 10 Year up +0.05 at 1.31 (began the year at 1.28; 5 years ago it was 2.83)
Germany 10 Year down -0.20 at 0.21 (began the year at 0.24; 5 years ago it was 1.75)
France 10 Year down -0.16 at 0.62 (began the year at 0.70; 5 years ago it was 2.41)
Italy 10 Year down -0.80 at 2.74 (began the year at 2.74; 5 years ago it was 3.82)
Japan 10 Year down -0.13 at 0.00 (began the year at -0.01; 5 years ago it was 0.67)
Barclays EM Basket up +0.00 at 6.11 (began the year at 6.22; 5 years ago it was 5.74)
 
Selected Currencies
€/$ down -0.002 (-0.20%) at 1.138 (YTD: -0.65%; 5YR: -15.9%)
£/€ up -0.002 (+0.19%) at 1.130 (YTD: 1.49%; 5YR: -7.3%)
£/$ down +0.000 (+0.01%) at 1.285 (YTD: 0.85%; 5YR: -21.7%)
$/¥ down +0.15 (-0.14%) at 108.82 (YTD: -0.77%; 5YR: 4.1%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.35 (-0.58%) at 60.21 (YTD: 13.24%; 5YR: -43.6%)
WTI Crude ($/bbl) down +0.20 (+0.38%) at 52.31 (YTD: 15.19%; 5YR: -44.3%)
Gold ($/ozt) up -1.49 (-0.12%) at 1292.12 (YTD: 0.75%; 5YR: 3.0%)
Copper ($/mt) up +50.00 (+0.84%) at 5970.00 (YTD: 0.08%; 5YR: -18.3%)
 
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