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16 July 2019

16/07/2019

Market Data and Morning Chat

Morning Chat

Expecting the cracks: Early yesterday morning, China dished up their second quarter growth rate of 6.2%, the slowest pace in over a quarter-century, yet Chinese stocks rallied 0.4% because the data was in line with expectations. Moreover, concomitant releases covering industrial output and retail sales tempered the slower growth data. June industrial production rebounded from May’s 17-year low posting a +6.3% pace compared to the +5.2% expected. June retail sales growth was even stronger at +9.8%, up from May’s +8.6% and it was expected to slow. Finally, fixed-asset investment grew 5.8%, 0.3% stronger than expected. Some fine China numbers indeed.

Empirical evidence: Last month the Empire State manufacturing index registered its sharpest ever monthly decline when the index tumbled to -8.6. Definitely bad news. So, good news, the Empire State index rebounded back into positive territory at 4.3, beating expectations, and re-entering the range it’s mainly been in this year – OK, the lower end, but still. The bad news this time though, aside from still sluggish new orders, was that Fed Chairman Powell cited such weaker data as last month’s weak index as a reason to support a rate cut, so this could soften the Fed’s intention to cut rates.

Fastenal your seatbelts as earnings season shifts gears: Companies have already started reporting second quarter earnings, but now the bigger names get started. Citibank kicked off for the major banks and they posted a slight beat boosted by their listing of their bond trading platform Tradeweb. Excluding Tradeweb, Citi posted earnings per share of $1.83 versus the $1.80 banked on, helped by lower taxes and share buybacks. OK, but not spectacular leading shares to fall 0.1%. Meanwhile, Fastenal, the largest fastener distributor (clue was in the name) reported underwhelming numbers dampened by tariffs and cost inflation tying shares back 0.9%.

Geez, Barry – tropical storm Barry has shuttered three-quarters of Gulf of Mexico oil production.
… leaving the S&P500 energy sector unwell as it falls 0.9% - the worst sector move yesterday
Roundup some cheer for Bayer as the California cancer damages are pruned 69% to $25.3million
Peugeot sales driven lower in China & Mid-East by over 60% but Europe market share increases

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +1.60 (+0.13%) at 1,283 (YTD: 18.38%; 5YR: 52.0%)
MSCI AC World Equities (USD) up +7.11 (+0.08%) at 9,278 (YTD: 19.38%; 5YR: 43.3%)
Barclays Global Aggregate Bonds up +0.88 (+0.18%) at 503 (YTD: 5.09%; 5YR: 6.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +0.53 (+0.02%) at 3,014 (YTD: 20.24%; 5YR: 52.1%)
NASDAQ up +14.04 (+0.17%) at 8,258 (YTD: 24.46%; 5YR: 86.6%)
Euro STOXX 50 up +4.59 (+0.13%) at 3,502 (YTD: 16.69%; 5YR: 9.3%)
FTSE 100 up +25.75 (+0.34%) at 7,532 (YTD: 11.94%; 5YR: 11.0%)
CAC up +5.35 (+0.10%) at 5,578 (YTD: 17.92%; 5YR: 27.7%)
DAX up +64.02 (+0.52%) at 12,387 (YTD: 17.32%; 5YR: 25.6%)
Nikkei 225 down -150.65 (-0.69%) at 21,535 (YTD: 7.60%; 5YR: 39.9%)
Hang Seng up +56.73 (+0.20%) at 28,612 (YTD: 10.70%; 5YR: 21.6%)
MSCI Emerging Markets up +6.84 (+0.65%) at 1,058 (YTD: 9.52%; 5YR: -0.9%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.10 (began the year at 2.68; 5 years ago it was 2.53)
US 2 Year up +0.01 at 1.84 (began the year at 2.49; 5 years ago it was 0.48)
UK 10 Year down -0.03 at 0.80 (began the year at 1.28; 5 years ago it was 2.65)
Germany 10 Year up +0.00 at -0.25 (began the year at 0.24; 5 years ago it was 1.19)
France 10 Year up +0.00 at 0.01 (began the year at 0.70; 5 years ago it was 1.61)
Italy 10 Year up +0.00 at 1.65 (began the year at 2.74; 5 years ago it was 2.82)
Japan 10 Year down 0.00 at -0.12 (began the year at -0.01; 5 years ago it was 0.54)
Barclays EM Basket down -0.01 at 5.87 (began the year at 6.22; 5 years ago it was 5.28)

Selected Currencies
$ strengthened +0.0001 versus € (+0.01%) at 1.1258 ($: YTD: 1.69%; 5YR: 16.8%)
€ strengthened +0.0002 versus £ (-0.02%) at 1.1112 (€: YTD: 0.16%; 5YR: 14.0%)
$ strengthened +0.0002 versus £ (+0.02%) at 1.2510 ($: YTD: 1.85%; 5YR: 27.0%)
¥ weakened -0.1900 versus $ (-0.18%) at 108.0600 (¥: YTD: -1.48%; 5YR: -5.9%)

Selected Commodities
Brent Crude ($/bbl) up +0.21 (+0.32%) at 66.27 (YTD: 24.64%; 5YR: -37.1%)
WTI Crude ($/bbl) down -0.63 (-1.05%) at 59.58 (YTD: 31.20%; 5YR: -40.4%)
Gold ($/ozt) down -0.72 (-0.05%) at 1413.43 (YTD: 10.21%; 5YR: 8.8%)
Copper ($/mt) up +48.00 (+0.81%) at 5983.00 (YTD: 0.30%; 5YR: -16.1%)

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