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1 July 2019

01/07/2019

Market Data and Morning Chat

Morning Chat

Happy Canada Day: Canada’s had a bit of a brutal year. Most importantly, an American team won the Stanley Cup. Additionally, the TSE index lags the S&P500 14.2% to 17.2%, Trudeau’s government has been in a kerfuffle, and China is decidedly miffed having arrested 13 canucks since the arrest of Huawei’s CFO. Yet, there is good news. The Loonie (Canadian dollar) has gained 4.7% against the greenback (US dollar) this year, the 5.4% unemployment is lower than expected. More, April’s 0.3% monthly GDP beat the 0.1% estimate while 0.1% producer price inflation was well below the 1.5% expected. OK, eh?

And somewhat surprising: Looming over the week was the G20 summit but did you see much about it? Presidents Trump and Xi agreed to restart talks, but that’s about it, so Trump opted for a spontaneous photo-op in North Korea which has proved a bit of a distraction. It will be interesting to see how markets react. Last week the American indices slipped 0.3% to 0.8% on concern over the trade talks. European indices managed, surprisingly, a more positive turn, rising generally 0.3% to 0.5% (Italy stumbled 0.7%), but the week’s gains came on Friday as the G20 kicked off.

So, we kick of another month: A new week, a new month. So it means Friday will be the US non-farm payrolls; the forecast is 158,000, low, but last month’s 75,000 was a surprise undershoot. Germany will give us factory orders and retail sales – it might give some positive signal over the economy. Then there is a host of business sentiment indicators – the UK Markit PMI, China’s Caixin PMI and Japan’s tankan survey. The UK’s manufacturing and construction surveys are expected to show continuing contraction – be great if they didn’t – while services should show an expansion. Roll on the week!

Labour’s John McDonnell confirms considering a tax on lifetime gifts over £125,000 to children
Conagra recouped some lost ground gaining 4.3% after Thursday’s earnings-based decline.
Micron Tech chipped in another 9.5% gain on better-than-expected earnings
The big US banks cashed in Friday as the Fed announced they all passed the stress test
Constellation Brands shares hopped up 4.6% as the beer & spirits co’s earnings beat forecasts
Lego looks to snap another piece into place with a £5.9billion bid for Merlin Entertainment
Yankees beat the BoSox in the London double-header attended by 130,000. It’s not just rounders.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +5.14 (+0.41%) at 1,260 (YTD: 16.27%; 5YR: 49.9%)
MSCI AC World Equities (USD) up +50.28 (+0.55%) at 9,122 (YTD: 17.38%; 5YR: 40.7%)
Barclays Global Aggregate Bonds up +0.85 (+0.17%) at 506 (YTD: 5.57%; 5YR: 6.3%)

Selected Equity Indices (Capital returns)
S&P 500 up +16.84 (+0.58%) at 2,942 (YTD: 17.35%; 5YR: 49.1%)
NASDAQ up +38.49 (+0.48%) at 8,006 (YTD: 20.66%; 5YR: 79.6%)
Euro STOXX 50 up +31.31 (+0.91%) at 3,474 (YTD: 15.73%; 5YR: 6.6%)
FTSE 100 up +23.30 (+0.31%) at 7,426 (YTD: 10.37%; 5YR: 9.2%)
CAC 40 up +45.36 (+0.83%) at 5,539 (YTD: 17.09%; 5YR: 24.2%)
DAX up +127.77 (+1.04%) at 12,399 (YTD: 17.42%; 5YR: 25.2%)
Nikkei 225 up +454.05 (+2.13%) at 21,730 (YTD: 8.57%; 5YR: 41.8%)
Hang Seng down -78.80 (-0.28%) at 28,543 (YTD: 10.43%; 5YR: 23.1%)
MSCI Emerging Markets down 0.00 (0.00%) at 1,055 (YTD: 9.22%; 5YR: 0.3%)

Selected Government Bond Yields
US 10 Year up +0.04 at 2.04 (began the year at 2.68; 5 years ago it was 2.56)
US 2 Year up +0.04 at 1.79 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year up +0.01 at 0.83 (began the year at 1.28; 5 years ago it was 2.71)
Germany 10 Year up +0.01 at -0.32 (began the year at 0.24; 5 years ago it was 1.25)
France 10 Year up +0.01 at 0.00 (began the year at 0.70; 5 years ago it was 1.70)
Italy 10 Year down -0.02 at 2.08 (began the year at 2.74; 5 years ago it was 2.83)
Japan 10 Year up +0.02 at -0.15 (began the year at -0.01; 5 years ago it was 0.55)
Barclays EM Basket down -0.01 at 5.88 (began the year at 6.22; 5 years ago it was 5.28)

Selected Currencies
$ strengthened +0.0030 versus € (+0.26%) at 1.1329 ($: YTD: 1.07%; 5YR: 17.3%)
€ weakened -0.0017 versus £ (+0.15%) at 1.1192 (€: YTD: -0.55%; 5YR: 12.0%)
$ strengthened +0.0016 versus £ (+0.13%) at 1.2679 ($: YTD: 0.53%; 5YR: 26.1%)
¥ weakened -0.5600 versus $ (-0.52%) at 108.4400 (¥: YTD: -1.13%; 5YR: -6.4%)

Selected Commodities
Brent Crude ($/bbl) up +2.03 (+3.15%) at 66.46 (YTD: 25.00%; 5YR: -40.3%)
WTI Crude ($/bbl) down -0.96 (-1.62%) at 58.47 (YTD: 28.76%; 5YR: -44.7%)
Gold ($/ozt) down -24.65 (-1.75%) at 1384.80 (YTD: 7.98%; 5YR: 4.4%)
Copper ($/mt) up +4.00 (+0.07%) at 5993.00 (YTD: 0.47%; 5YR: -13.7%)

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