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25 July 2019

25/07/2019

Market Data and Morning Chat

Morning Chat

Although nothing seems right, In cars: Germany is probably not feeling safest of all in the auto sector. Their Markit manufacturing PMI slipped from an already disappointing 45.0 to a seven-year low 43.1 when it was expected to be 45.2. The fall is not all that surprising given the German IFO auto production expectations had already shown the way when it slipped at the end of June (the two surveys map closely). Moreover, while the Markit services survey rallied slightly, the manufacturing data should prompt the European Central Bank – who meet today – to consider how to drive the economy forward.

Servicing the manufacturers: The US Markit manufacturing PMI slipped to 50.0 – a near ten-year low – from last month’s 50.6 when 51.0 was expected. Ouch. Especially when you roll in the falling output and employment sub-categories. Luckily, the services PMI rode to the rescue posting a decent 52.2, beating both the 51.8 expected and last month’s 51.5. That allowed the composite to edge up slightly and in turn the S&P500 to rally 0.47% and Nasdaq100 by 0.69%. Coupled with the 7.0% increase in new home sales, you’d think equities might move up more but the mixed earnings results tempered overall exuberance.

So, earnings? It was another busy day for US corporate earnings results. Yeah, Boeing hit further turbulence with numbers knocking the shares by 3.1%. But AT&T (+3.6%) beat their numbers despite dialing down DirecTV subscriber growth. NextEra (+1.3%) saw powered-up numbers top their estimate range. General Dynamics (+0.9%) expected to see earnings fall 5%, but they shot up 2%. Facebook (+1.8% overall) topped their earnings forecast too. All good, but it wasn’t all sunshine and roses. PayPal (-4.5%), F5 Networks (-1.5% aftermarket), Citrix (-5.7%), and ServiceNow (-4.6%) despite earnings gains all fell after guidance numbers didn’t send the right message.

St Bridget’s Day Massacre: Boris Johnson wasted little time clearing out the Cabinet and installing his team. Yes, some of the outgoing resigned before he was shot of them, but they’re out just the same. Jeremy Hunt, Liam Fox, Philip Hammond and (train commuters raising a cheer) Chris Grayling are gone. Now we have Sajid Javid as Chancellor, Priti Patel – who hopefully won’t break ministerial code this time – as Home Secretary, Dominic Raab as Foreign Secretary, Ben Wallace will have to hit the ground running (or seas swimming) at Defence, and Amber Rudd at Work & Pensions, Women & Equalities.

Others in Cabinet include Michael Gove, Liz Truss, Andrea Leadsom and Gavin Williamson
Ford Motors fell 5.5% afterhours as China SUV sales swerved down leaving earnings below estimates
Deutsche Bank shares fell 1.9% as the company announce a €1billion less in their bank account
As an early warning, the summer sunshine is beckoning, so the Morning Chat will take a short one-week hiatus to allow my vitamin D levels to accumulate – and to give Boris a week to really get going!

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +3.92 (+0.31%) at 1,287 (YTD: 18.76%; 5YR: 52.3%)
MSCI AC World Equities (USD) up +34.68 (+0.37%) at 9,295 (YTD: 19.59%; 5YR: 43.8%)
Barclays Global Aggregate Bonds up +0.89 (+0.18%) at 504 (YTD: 5.33%; 5YR: 6.3%)

Selected Equity Indices (Capital returns)
S&P 500 up +14.09 (+0.47%) at 3,020 (YTD: 20.45%; 5YR: 52.6%)
NASDAQ up +70.10 (+0.85%) at 8,322 (YTD: 25.41%; 5YR: 87.0%)
Euro STOXX 50 up +0.03 (+0.00%) at 3,533 (YTD: 17.71%; 5YR: 11.3%)
FTSE 100 down -55.40 (-0.73%) at 7,501 (YTD: 11.49%; 5YR: 10.5%)
CAC down -12.29 (-0.22%) at 5,606 (YTD: 18.50%; 5YR: 29.4%)
DAX up +32.15 (+0.26%) at 12,523 (YTD: 18.60%; 5YR: 29.9%)
Nikkei 225 up +46.98 (+0.22%) at 21,757 (YTD: 8.70%; 5YR: 40.7%)
Hang Seng up +84.19 (+0.30%) at 28,608 (YTD: 10.69%; 5YR: 18.1%)
MSCI Emerging Markets down -0.14 (-0.01%) at 1,055 (YTD: 9.27%; 5YR: -2.2%)

Selected Government Bond Yields
US 10 Year down 0.00 at 2.04 (began the year at 2.68; 5 years ago it was 2.47)
US 2 Year down 0.00 at 1.81 (began the year at 2.49; 5 years ago it was 0.49)
UK 10 Year down -0.01 at 0.68 (began the year at 1.28; 5 years ago it was 2.57)
Germany 10 Year down 0.00 at -0.38 (began the year at 0.24; 5 years ago it was 1.15)
France 10 Year down 0.00 at -0.12 (began the year at 0.70; 5 years ago it was 1.55)
Italy 10 Year down -0.01 at 1.49 (began the year at 2.74; 5 years ago it was 2.71)
Japan 10 Year down 0.00 at -0.16 (began the year at -0.01; 5 years ago it was 0.53)
Barclays EM Basket down -0.01 at 5.78 (began the year at 6.22; 5 years ago it was 5.28)

Selected Currencies
$ strengthened +0.0009 versus € (+0.08%) at 1.1136 ($: YTD: 2.76%; 5YR: 17.1%)
€ strengthened +0.0008 versus £ (-0.07%) at 1.1206 (€: YTD: -0.68%; 5YR: 12.8%)
$ strengthened +0.0021 versus £ (+0.17%) at 1.2479 ($: YTD: 2.09%; 5YR: 26.5%)
¥ strengthened +0.0200 versus $ (+0.02%) at 108.1100 (¥: YTD: -1.43%; 5YR: -5.8%)

Selected Commodities
Brent Crude ($/bbl) up +0.29 (+0.46%) at 62.88 (YTD: 18.26%; 5YR: -41.1%)
WTI Crude ($/bbl) down -0.96 (-1.69%) at 55.69 (YTD: 22.64%; 5YR: -47.1%)
Gold ($/ozt) down -2.38 (-0.17%) at 1423.50 (YTD: 11.00%; 5YR: 8.9%)
Copper ($/mt) up +31.00 (+0.52%) at 5999.00 (YTD: 0.57%; 5YR: -16.3%)

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