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24 July 2019

24/07/2019

Market Data and Morning Chat

Morning Chat

Next stop 10 Downing Street, all change, all change: The Boris express barrelled through the leadership vote leaving Mr. Johnson tooting the whistle as the new Prime Minister, the 41stsuch Commons member (14 under Queen Elizabeth). US President Trump quickly applauded him as the “British Trump”, an equally quick Michel Barnier signalled his readiness to rework the declaration (but recall the backstop is in the Withdrawal agreement), while Macron opted to praise May and many Conservatives threatened or have resigned. Concomitantly, the pound partially derailed, falling to $1.2438 / €1.1153 on a heightened no-deal risk. Next stop, Cabinet selection.

So, is Boris at a station or terminal? Based on sterling, his election seems mostly in the numbers – there was a slight decline as the no-deal Brexit risk increased, though it could slip further. Yet, the 10-year bond yield fell while the UK yield curve remains 20 basis points – and more mid-range – lower than a year ago. As for equities, the FTSE100 rallied 0.56% - less than the 1-1.6% of Continental indices, but up - and this was on a day the IMF lowered their 2019 global growth forecast to 3.2%. Right now, trade talks, tariffs and earnings matter more.

Earnings season rolls merrily along: It was one of the bigger earnings news days with a number of blue chips reporting. Toy-maker Hasbro (+9.95%) wasn’t just playing around with profits and sales beating analyst expectations thanks to franchise licences like Avengers. KeyCorp (+3.45%) rallied on record-setting investment banking fees and lower tax liability. Biogen (+4.90%) cured some of the blues around the stock with good earnings and improved outlook. United Tech (+1.47%) saw aerospace earnings continue to lift the outlook above expectations. Plus, Coke bubbled up 6.03% as low-sugar drinks helped push global sales volumes. Nice to see upbeat numbers.

 

The IMF think Brexit may hit growth as they lowered 2019 forecasts, but rebound in 2020 to 3.7%
… and Bank of England economist Haldane thinks UK growth is actually stronger than thought
Amazon, Facebook, Alphabet and other big tech cos retreated on broadening US antitrust review
Swiss sensor supplier AMS (+8.0%) shares recognised a recovery in face-recognition sales
Snap (+14.2%) shares got the thumbs up as their smaller-than-expected loss really clicked
Lockheed Martin’s modestly surprising earnings not da bomb, but didn’t bomb with shares flat
Kleenex-maker Kimberly Clark’s (+0.6%) earnings nothing to sniff at and guidance raised
Texas Instruments’ (+8.0%) $1.29 earnings per share rode roughshod over the $1.22 forecast
Visa shares refused to charge higher despite decent earnings beat, falling 0.35% instead
Canadian National (+0.04%) have earnings in train and guidance confirmed, but carloads weak

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +8.48 (+0.67%) at 1,283 (YTD: 18.40%; 5YR: 51.2%)
MSCI AC World Equities (USD) up +50.03 (+0.54%) at 9,260 (YTD: 19.15%; 5YR: 42.6%)
Barclays Global Aggregate Bonds down -1.31 (-0.26%) at 504 (YTD: 5.15%; 5YR: 6.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +20.44 (+0.68%) at 3,005 (YTD: 19.89%; 5YR: 51.2%)
NASDAQ up +47.27 (+0.58%) at 8,251 (YTD: 24.36%; 5YR: 84.5%)
Euro STOXX 50 up +42.95 (+1.23%) at 3,533 (YTD: 17.71%; 5YR: 9.7%)
FTSE 100 up +41.93 (+0.56%) at 7,557 (YTD: 12.32%; 5YR: 10.8%)
CAC up +51.14 (+0.92%) at 5,618 (YTD: 18.76%; 5YR: 27.4%)
DAX up +201.34 (+1.64%) at 12,491 (YTD: 18.30%; 5YR: 27.5%)
Nikkei 225 up +88.69 (+0.41%) at 21,710 (YTD: 8.47%; 5YR: 42.0%)
Hang Seng up +169.64 (+0.60%) at 28,636 (YTD: 10.80%; 5YR: 18.6%)
MSCI Emerging Markets up +1.68 (+0.16%) at 1,055 (YTD: 9.29%; 5YR: -2.3%)

Selected Government Bond Yields
US 10 Year down 0.00 at 2.08 (began the year at 2.68; 5 years ago it was 2.50)
US 2 Year down -0.01 at 1.83 (began the year at 2.49; 5 years ago it was 0.49)
UK 10 Year down -0.02 at 0.69 (began the year at 1.28; 5 years ago it was 2.61)
Germany 10 Year up +0.01 at -0.35 (began the year at 0.24; 5 years ago it was 1.18)
France 10 Year up +0.01 at -0.08 (began the year at 0.70; 5 years ago it was 1.57)
Italy 10 Year down 0.00 at 1.60 (began the year at 2.74; 5 years ago it was 2.73)
Japan 10 Year up +0.00 at -0.15 (began the year at -0.01; 5 years ago it was 0.52)
Barclays EM Basket down -0.01 at 5.79 (began the year at 6.22; 5 years ago it was 5.26)

Selected Currencies
$ strengthened +0.0001 versus € (+0.01%) at 1.1150 ($: YTD: 2.64%; 5YR: 17.2%)
€ weakened -0.0007 versus £ (+0.06%) at 1.1163 (€: YTD: -0.30%; 5YR: 12.9%)
$ weakened -0.0008 versus £ (-0.06%) at 1.2447 ($: YTD: 2.35%; 5YR: 26.7%)
¥ strengthened +0.0400 versus $ (+0.04%) at 108.1300 (¥: YTD: -1.42%; 5YR: -5.8%)

Selected Commodities
Brent Crude ($/bbl) down -0.31 (-0.49%) at 63.51 (YTD: 19.45%; 5YR: -39.9%)
WTI Crude ($/bbl) up +0.43 (+0.76%) at 56.65 (YTD: 24.75%; 5YR: -47.4%)
Gold ($/ozt) up +3.13 (+0.22%) at 1420.92 (YTD: 10.80%; 5YR: 9.8%)
Copper ($/mt) down -49.50 (-0.82%) at 5968.00 (YTD: 0.05%; 5YR: -15.3%)

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