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5 July 2019

05/07/2019

Market Data and Morning Chat

Morning Chat

Gaining a little breathing Rome: The Italian MIB is having a good July rising 4.1% so far. Yesterday continued the run as the index added 1.0% – far in away the best of the European bourses – to close at a near 1-year high. Now, the perception of central banks moving to a more economically supportive stance is helping buoy markets, but for Italy it’s also the news that the EU Commission concluded Italy should not face disciplinary action over their budget deficit. Che bello! Italian banks leapt – two by over 5% – on the decision, as did, probably, the government ministers.

Happiness is not in money, but in shopping: quoth Marylin Monroe, but Europe seems to be ignoring her advice. Euro Area retail sales fell 0.3% over May as the pace of sales growth slowed for the fourth month in a row. Economists had expected a rise 0.3%, so definitely disappointing. Food, drink and tobacco sales – nearly 40% of total retail sales – were down 0.5%, accounting for two thirds of the decline. Autos sales also had the brakes on down 1.3% while clothing was pants at -0.6%. Money may not buy happiness, but it helps, especially when spent on retail goods.

Sunny & hot with a chance of marines: Echoing a closing scene of a James Bond movie, 30 marines from 40 Commando boarded and impounded an Iranian oil tanker, the Grace I, by helicopter. They waited until the ship was in Gibraltar waters (though Spain unsurprisingly said the waters were Spanish) and boarded under the auspices of EU sanctions over Syria. Iran sees it as a further escalation of the actions being taken over their uranium enrichment programme. What is amazing is that the oil price fell in reaction. Once again, attacking a tanker seems a short-lived event for markets.

US nonfarm payrolls come out today – estimates call for 150,000 and a 3.6% unemployment rate
… oh, and wages up 0.3% on the month or 3.2% annually!
William Hill look to take 700 shops off the table as betting limits reduce their earnings pot.
R Durtnell & Sons – Britain’s oldest construction firm – has ceased trading after 428 year in business
The German 10-year fell 0.4% to the lowest recorded level and equal to the ECB deposit rate

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +1.26 (+0.10%) at 1,283 (YTD: 18.39%; 5YR: 51.4%)
MSCI AC World Equities (USD) up +7.73 (+0.08%) at 9,278 (YTD: 19.39%; 5YR: 42.4%)
Barclays Global Aggregate Bonds up +0.13 (+0.03%) at 507 (YTD: 5.77%; 5YR: 7.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +22.81 (+0.77%) at 2,996 (YTD: 19.51%; 5YR: 50.9%)
NASDAQ up +61.14 (+0.75%) at 8,170 (YTD: 23.13%; 5YR: 82.1%)
Euro STOXX 50 up +3.52 (+0.10%) at 3,544 (YTD: 18.08%; 5YR: 8.4%)
FTSE 100 down -5.74 (-0.08%) at 7,604 (YTD: 13.01%; 5YR: 10.7%)
CAC 40 up +1.92 (+0.03%) at 5,621 (YTD: 18.81%; 5YR: 25.8%)
DAX up +13.66 (+0.11%) at 12,630 (YTD: 19.61%; 5YR: 26.2%)
Nikkei 225 up +43.93 (+0.20%) at 21,746 (YTD: 8.65%; 5YR: 40.9%)
Hang Seng up +24.79 (+0.09%) at 28,821 (YTD: 11.51%; 5YR: 22.4%)
MSCI Emerging Markets up +4.99 (+0.47%) at 1,065 (YTD: 10.24%; 5YR: 0.2%)

Selected Government Bond Yields
US 10 Year down -0.01 at 1.94 (began the year at 2.68; 5 years ago it was 2.64)
US 2 Year down -0.01 at 1.75 (began the year at 2.49; 5 years ago it was 0.51)
UK 10 Year down -0.02 at 0.68 (began the year at 1.28; 5 years ago it was 2.76)
Germany 10 Year up +0.04 at -0.36 (began the year at 0.24; 5 years ago it was 1.26)
France 10 Year up +0.08 at -0.05 (began the year at 0.70; 5 years ago it was 1.70)
Italy 10 Year up +0.21 at 1.89 (began the year at 2.74; 5 years ago it was 2.83)
Japan 10 Year up +0.01 at -0.15 (began the year at -0.01; 5 years ago it was 0.57)
Barclays EM Basket down -0.01 at 5.83 (began the year at 6.22; 5 years ago it was 5.31)

Selected Currencies
$ strengthened +0.0005 versus € (+0.04%) at 1.1276 ($: YTD: 1.54%; 5YR: 17.0%)
€ weakened -0.0006 versus £ (+0.05%) at 1.1161 (€: YTD: -0.28%; 5YR: 13.1%)
$ weakened -0.0002 versus £ (-0.02%) at 1.2585 ($: YTD: 1.26%; 5YR: 26.7%)
¥ weakened -0.1200 versus $ (-0.11%) at 107.9100 (¥: YTD: -1.62%; 5YR: -5.4%)

Selected Commodities
Brent Crude ($/bbl) up +0.06 (+0.10%) at 63.14 (YTD: 18.75%; 5YR: -42.4%)
WTI Crude ($/bbl) up +1.09 (+1.94%) at 57.34 (YTD: 26.27%; 5YR: -44.9%)
Gold ($/ozt) down -2.11 (-0.15%) at 1413.99 (YTD: 10.26%; 5YR: 7.1%)
Copper ($/mt) up +2.00 (+0.03%) at 5920.00 (YTD: -0.75%; 5YR: -17.2%)

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