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18 July 2019

18/07/2019

Market Data and Morning Chat

Morning Chat

A mix of earnings news: There were a score of big name companies reporting earnings yesterday, with more showing a positive result versus expectations than negative. Didn’t mean their shares responded as you would hope though. Omnicom fell 2.9% despite beating estimates and seeing strong US client spending. Frustratingly, CSX railroad saw their shares derail, falling 10.3% as they cited freight declines when cutting guidance – also sending other transport stocks, especially rail companies – into reverse too. At least, ASML leapt 6.2% as they saw solid sales of their extreme ultra-violet chip production tools despite a slow-down in global chip sales.

Just when the numbers looked ok: So, earnings releases look ok so far. There was a concern that overall numbers could shrink by 0.3%. However, assessing the 8.6% of S&P500 companies already reporting, 84% have beaten analyst forecasts – that’s a great start. Moreover, it has shifted the earnings expectation from decline to a forecast 0.4% rise. Great, eh? So it is somewhat disappointing that equity markets slipped red-ward yesterday. The continental indices were down 0.9 to 1.0%, the FTSE100 fell 0.6% and the US S&P500 by 0.7% as the better-than-expected earnings and recent economic data knocks those pesky rate expectations.

More buck for your bank: Adding Bank of America’s results yesterday into the mix, we’ve now seen the earnings of the big US banks and generally they’re messy, but good. Goldman’s important trading unit saw a smaller decline than expected helping the bank top its earning estimates. Citibank put tight cost controls to the fore to get better profits out of smaller revenues. Wells saw better broad revenues, although their net interest income was weak, much as happened with both Bank of America, and, to a lesser negative extent JP Morgan. Better revenues, better earnings, but frayed at the edges.

Netflix chills by 12.0% as subscriber numbers down in US and globally up only half the target
IBM shares up 1.3% after racking up another declining quarter that was not as bad as forecast
The unpopularity of diesel-engined cars steers European cars sales to a 7.8% decline in June
UK inflation held steady at the 2% target with ex food and energy rising to 1.8%, meanwhile…
,,, Canadian inflation fell to 2% from 2.4%. 2% seems very popular as an inflation rate.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -5.73 (-0.45%) at 1,275 (YTD: 17.71%; 5YR: 51.7%)
MSCI AC World Equities (USD) down -42.45 (-0.46%) at 9,210 (YTD: 18.50%; 5YR: 42.8%)
Barclays Global Aggregate Bonds up +1.26 (+0.25%) at 504 (YTD: 5.15%; 5YR: 6.0%)

Selected Equity Indices (Capital returns)
S&P 500 down -19.62 (-0.65%) at 2,984 (YTD: 19.05%; 5YR: 50.9%)
NASDAQ down -37.59 (-0.46%) at 8,185 (YTD: 23.36%; 5YR: 84.7%)
Euro STOXX 50 down -19.78 (-0.56%) at 3,502 (YTD: 16.66%; 5YR: 10.7%)
FTSE 100 down -41.74 (-0.55%) at 7,535 (YTD: 12.00%; 5YR: 11.6%)
CAC down -42.67 (-0.76%) at 5,572 (YTD: 17.78%; 5YR: 28.5%)
DAX down -89.94 (-0.72%) at 12,341 (YTD: 16.88%; 5YR: 27.0%)
Nikkei 225 down -422.94 (-1.97%) at 21,046 (YTD: 5.15%; 5YR: 38.3%)
Hang Seng down -159.49 (-0.56%) at 28,434 (YTD: 10.01%; 5YR: 21.2%)
MSCI Emerging Markets down -5.49 (-0.52%) at 1,055 (YTD: 9.23%; 5YR: -0.8%)

Selected Government Bond Yields
US 10 Year down 0.00 at 2.05 (began the year at 2.68; 5 years ago it was 2.48)
US 2 Year up +0.00 at 1.82 (began the year at 2.49; 5 years ago it was 0.48)
UK 10 Year down -0.06 at 0.76 (began the year at 1.28; 5 years ago it was 2.57)
Germany 10 Year up +0.00 at -0.29 (began the year at 0.24; 5 years ago it was 1.15)
France 10 Year down -0.01 at -0.05 (began the year at 0.70; 5 years ago it was 1.57)
Italy 10 Year up +0.00 at 1.59 (began the year at 2.74; 5 years ago it was 2.78)
Japan 10 Year down -0.01 at -0.14 (began the year at -0.01; 5 years ago it was 0.54)
Barclays EM Basket down 0.00 at 5.86 (began the year at 6.22; 5 years ago it was 5.26)

Selected Currencies
$ weakened -0.0018 versus € (-0.16%) at 1.1243 ($: YTD: 1.83%; 5YR: 16.8%)
€ strengthened +0.0023 versus £ (-0.21%) at 1.1068 (€: YTD: 0.56%; 5YR: 14.1%)
$ strengthened +0.0005 versus £ (+0.04%) at 1.2444 ($: YTD: 2.37%; 5YR: 27.1%)
¥ strengthened +0.4400 versus $ (+0.41%) at 107.6500 (¥: YTD: -1.87%; 5YR: -5.8%)

Selected Commodities
Brent Crude ($/bbl) up +0.16 (+0.25%) at 63.45 (YTD: 19.33%; 5YR: -40.1%)
WTI Crude ($/bbl) down -0.84 (-1.46%) at 56.78 (YTD: 25.04%; 5YR: -45.0%)
Gold ($/ozt) down -4.40 (-0.31%) at 1422.22 (YTD: 10.90%; 5YR: 8.5%)
Copper ($/mt) down -32.00 (-0.53%) at 5980.00 (YTD: 0.25%; 5YR: -15.4%)

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