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23 July 2019

23/07/2019

Market Data and Morning Chat

Morning Chat

Trump tips the cap to Pelosi: A generally quieter subject under Trump’s administration than the crunch negotiations under Obama, the debt ceiling resumed in 2017. The budget caused a shutdown earlier this year before being agreed. Now cap negotiations were needed again. Treasury Secretary Steve Mnuchin warned the US government’s cash pile was running low and could be spent by early-September so legislators needed a deal before the summer recess. Well, Donald Trump tweeted the White House and Congress had reached a deal. The reported 2-year “no-poison-pill” $350billion uplift still gives Republicans $75billion in savings and a budget to boot.

Dancing below the ceiling: As it is currently framed, the budget and debt deal doesn’t have any actual spending cuts, more a trimming on the planned level of spending – a bit like a 17.6% off sale on future spending plans. But it does kick the risk-of-default can two years down the road (post-2020 election – good news for Trump). Anticipation trimmed the yield on US Treasuries slightly before it came back but – alongside a rising oil price and Chinese media reports that face-to-face tariff talks could resume – it has given a small boost to the S&P500 as it closed up 0.28%.

Ooh, it looks like everybody is having a ball: European indices were also on the rise with the FTSE100 up 0.15%, DAX +0.37%, CAC +0.31% and MIB +0.29%. Dutch company Koninklijke Philips added enthusiasm, with a robust 5.2% gain after topping estimates thanks to increased Chinese healthcare spending – ticking the boxes on many levels – European company doing well, China growth plus improved trade outlook. Tui flew 4.6% higher on passenger growth to lead the FTSE100, Infineon and Wirecard both saw +2½% gains on tech anticipation, and auto-parts company Valeo (+3.2%) led in France after forecasting an improved second half outlook.

Oddsmakers favour Boris Johnson being declared Prime Minister today with Hunt out of the hunt
Jo Swinson selected as the first female Liberal-Democrat leader and vowing to stop Brexit
Bayer AG (+0.25%) walking more comfortably after agreeing to sell Dr. Scholl’s for $585million
Whirlpool investors are in a spin; shares rallied 4.8% then fell -1.9% on great earnings and a recall
Halliburton (+9.2%) won last year's S&P500 wooden spoon, but is well now on gushing profits

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +1.41 (+0.11%) at 1,274 (YTD: 17.61%; 5YR: 50.5%)
MSCI AC World Equities (USD) up +13.23 (+0.14%) at 9,210 (YTD: 18.50%; 5YR: 42.0%)
Barclays Global Aggregate Bonds up +0.23 (+0.05%) at 505 (YTD: 5.42%; 5YR: 6.2%)

Selected Equity Indices (Capital returns)
S&P 500 up +8.42 (+0.28%) at 2,985 (YTD: 19.07%; 5YR: 50.2%)
NASDAQ up +57.65 (+0.71%) at 8,204 (YTD: 23.64%; 5YR: 83.4%)
Euro STOXX 50 up +9.74 (+0.28%) at 3,490 (YTD: 16.28%; 5YR: 9.3%)
FTSE 100 up +6.23 (+0.08%) at 7,515 (YTD: 11.69%; 5YR: 10.5%)
CAC up +14.68 (+0.26%) at 5,567 (YTD: 17.68%; 5YR: 27.2%)
DAX up +29.33 (+0.24%) at 12,289 (YTD: 16.39%; 5YR: 26.0%)
Nikkei 225 up +204.09 (+0.95%) at 21,621 (YTD: 8.02%; 5YR: 41.0%)
Hang Seng up +80.28 (+0.28%) at 28,452 (YTD: 10.08%; 5YR: 18.7%)
MSCI Emerging Markets down -3.68 (-0.35%) at 1,054 (YTD: 9.12%; 5YR: -2.2%)

Selected Government Bond Yields
US 10 Year up +0.00 at 2.05 (began the year at 2.68; 5 years ago it was 2.47)
US 2 Year up +0.01 at 1.82 (began the year at 2.49; 5 years ago it was 0.47)
UK 10 Year down -0.03 at 0.71 (began the year at 1.28; 5 years ago it was 2.55)
Germany 10 Year up +0.00 at -0.34 (began the year at 0.24; 5 years ago it was 1.15)
France 10 Year up +0.00 at -0.08 (began the year at 0.70; 5 years ago it was 1.54)
Italy 10 Year down -0.01 at 1.64 (began the year at 2.74; 5 years ago it was 2.74)
Japan 10 Year down -0.01 at -0.15 (began the year at -0.01; 5 years ago it was 0.53)
Barclays EM Basket down -0.01 at 5.80 (began the year at 6.22; 5 years ago it was 5.24)

Selected Currencies
$ strengthened +0.0027 versus € (+0.24%) at 1.1191 ($: YTD: 2.28%; 5YR: 16.9%)
€ weakened -0.0002 versus £ (+0.02%) at 1.1128 (€: YTD: 0.02%; 5YR: 13.7%)
$ strengthened +0.0030 versus £ (+0.24%) at 1.2451 ($: YTD: 2.31%; 5YR: 26.9%)
¥ weakened -0.2200 versus $ (-0.20%) at 108.1000 (¥: YTD: -1.44%; 5YR: -6.1%)

Selected Commodities
Brent Crude ($/bbl) up +0.26 (+0.41%) at 63.03 (YTD: 18.54%; 5YR: -41.0%)
WTI Crude ($/bbl) up +0.59 (+1.06%) at 56.22 (YTD: 23.81%; 5YR: -46.2%)
Gold ($/ozt) down -6.88 (-0.48%) at 1418.04 (YTD: 10.57%; 5YR: 8.7%)
Copper ($/mt) down -47.50 (-0.78%) at 6017.50 (YTD: 0.88%; 5YR: -14.5%)

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