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17 July 219

17/07/2019

Market Data and Morning Chat

Morning Chat

State of the Union: The UK Office of National Statistics released their Labour Market Commentary yesterday, and – despite the significantly increased whiff of no-deal Brexit in the air – the numbers were pretty good. Employment increased to a record high 32.75million mainly driven by women, unemployment fell 51,000 to register a 3.8% unemployment rate (3.6% for women, a record low). Job vacancies, while down, still number 836,000, a quarter of a million more than the 580,000 unemployed, and wages grew 3.4% year-on-year, 1.4% above inflation. Of course, we will need those pay gains as sterling slipped to a two-year low $1.2413.

All that upbeat news, and still the S&P fell: Amazingly, 50 years ago, the first men on the moon were busy collecting rocks. Back on Earth (and only yesterday), reports on US retail sales and factory output added more positive news. Retail sales rose 0.4% for the second month in a row when they were only expected to manage a measly 0.2%. Factory orders also rose 0.4%, beating a +0.1% estimate, being driven up by a 2.9% gain in motor vehicle and parts production. Even so, the S&P500 fell 0.3% as good news is bad news for a rate cut.

So, would £900billion get your vote? Ursula von der Leyen got the nod yesterday to be the EU Commission President winning her confirmation with 383 votes – just 9 more than was required. Based on the twitter feed, the pledges she made in the speech she gave earlier in the day certainly helped push her over the line, but didn’t help persuade everyone. Socialists were not convinced by the proposal of an EU-wide minimum wage and Greens didn’t budge over proposals to unlock €1trillion for a Sustainable Europe Investment Plan. But she made it, and for now, Europe have their woman.

Oh, and von der Leyen still faces inquiries into German Defence ministry maladministration.
Nigel Farage tweeted “Power but no legitimacy,” but MP Lisa Nandy noted von der Leyen won 52%
although Von der Leyen stated “In any case the U.K. will remain our ally, our partner and our friend.”
Meanwhile, Christine Lagarde resigned from the IMF in anticipation of her ECB appointment.
…and highly controversial EU civil servant Martin Selmayr also announced his early departure
Elsewhere, the big US banks announced messy numbers beating revenue expectations
Cintas shares rose 6.5% aftermarket on sales that were more than uniform and solid guidance
Johnson & Johnson injected an earnings beat and increased guidance, but shares down 1.6%
There was less passion for pepperoni as Domino’s reported slowest growth in seven years
... and a lot less fizz than hoped for in AG Barr’s profits leaving shares down 28.3%
A touch of Givenchy’s Riccardo Tisci helped redress Burberry’s China sales as shares leap 14.4%
French environment minister de Rugy resigned after shelling out public funds on lobster dinners
… fine dining and home repairs – just like a UK expenses scandal - but will there be any claw-back?

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -1.52 (-0.12%) at 1,281 (YTD: 18.24%; 5YR: 53.1%)
MSCI AC World Equities (USD) down -26.02 (-0.28%) at 9,252 (YTD: 19.05%; 5YR: 44.2%)
Barclays Global Aggregate Bonds down -0.96 (-0.19%) at 502 (YTD: 4.89%; 5YR: 5.7%)

Selected Equity Indices (Capital returns)
S&P 500 down -10.26 (-0.34%) at 3,004 (YTD: 19.83%; 5YR: 53.4%)
NASDAQ down -35.39 (-0.43%) at 8,223 (YTD: 23.93%; 5YR: 88.4%)
Euro STOXX 50 up +19.14 (+0.55%) at 3,521 (YTD: 17.32%; 5YR: 11.5%)
FTSE 100 up +45.48 (+0.60%) at 7,577 (YTD: 12.62%; 5YR: 12.4%)
CAC up +36.17 (+0.65%) at 5,614 (YTD: 18.68%; 5YR: 30.1%)
DAX up +43.63 (+0.35%) at 12,431 (YTD: 17.73%; 5YR: 27.4%)
Nikkei 225 down -66.07 (-0.31%) at 21,469 (YTD: 7.27%; 5YR: 39.7%)
Hang Seng down -79.61 (-0.28%) at 28,540 (YTD: 10.42%; 5YR: 21.3%)
MSCI Emerging Markets up +2.64 (+0.25%) at 1,060 (YTD: 9.80%; 5YR: -0.2%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.10 (began the year at 2.68; 5 years ago it was 2.45)
US 2 Year down 0.00 at 1.85 (began the year at 2.49; 5 years ago it was 0.44)
UK 10 Year up +0.02 at 0.82 (began the year at 1.28; 5 years ago it was 2.59)
Germany 10 Year down -0.02 at -0.27 (began the year at 0.24; 5 years ago it was 1.15)
France 10 Year down -0.03 at -0.02 (began the year at 0.70; 5 years ago it was 1.58)
Italy 10 Year down -0.02 at 1.59 (began the year at 2.74; 5 years ago it was 2.79)
Japan 10 Year down 0.00 at -0.13 (began the year at -0.01; 5 years ago it was 0.53)
Barclays EM Basket down -0.01 at 5.86 (began the year at 6.22; 5 years ago it was 5.27)

Selected Currencies
$ strengthened +0.0006 versus € (+0.05%) at 1.1207 ($: YTD: 2.14%; 5YR: 17.1%)
€ strengthened +0.0008 versus £ (-0.07%) at 1.1068 (€: YTD: 0.56%; 5YR: 14.3%)
$ strengthened +0.0014 versus £ (+0.11%) at 1.2404 ($: YTD: 2.68%; 5YR: 27.5%)
¥ strengthened +0.0800 versus $ (+0.07%) at 108.1900 (¥: YTD: -1.36%; 5YR: -6.3%)

Selected Commodities
Brent Crude ($/bbl) up +0.18 (+0.28%) at 64.42 (YTD: 21.16%; 5YR: -39.8%)
WTI Crude ($/bbl) down -1.96 (-3.29%) at 57.62 (YTD: 26.89%; 5YR: -43.1%)
Gold ($/ozt) down -1.80 (-0.13%) at 1404.48 (YTD: 9.52%; 5YR: 6.5%)
Copper ($/mt) up +29.00 (+0.48%) at 6012.00 (YTD: 0.79%; 5YR: -15.1%)

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