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24 June 2019

24/06/2019

Market Data and Morning Chat

Morning Chat

Getting to be a habit: Yes, last Friday was a down day for equities, just like the prior week. But, yes, markets experienced a positive week overall – like last week. Continental markets made strong gains – DAX up 2.0%, CAC up 3.0% and Italy’s MIB up 3.8%. Wow! Even the FTSE100 – somewhat plagued by Tory leadership wrangles – managed a decent +0.8%. Meanwhile, across the pond, US markets gained +2.2 to +3.3% depending on the index. Why so good a week? The current bugbear, US-China trade talks, had some positive news-flow while the US Fed offered softer language over rates. ‘Abbot that?

Can we build on growth? So, will good numbers continue (US indices hit new all-time highs as did Brazil’s)? Well, we have a number of possible triggers for gains – or, maybe, stumbles. The UK Office of National Statistics will issue the final Q1 GDP number – although no change from 0.5% is forecast – as will the US Bureau of Economic Analysis (where a slight improvement is expected). Add European inflation and a range of business sentiment indicators – always of interest – plus Japan issues industrial output, an indicator of Asian economic health. Oh, and the G20 summit where Trump meets Xi. Fingers crossed.

Au-righty then: Gold peaked in US dollar terms at $1,886.50 on August 22, 2011. It’s not necessarily been an ace venture since then, sliding back to roughly the $1,250 average level from about mid-June 2013. The sterling peak was a few days later at £1,158.51, and only sterling’s Brexit weakness boosted it back to around £1,000. Until recently, however. Now you can detect a decent rally up to $1,379.50 or £1,087.75 – six-year highs. Why? The increased rate cut probability tends to lead to a weaker dollar making gold a pet investment – plus gold loves geopolitical tensions and Iran’s elevating those.

Asian indices of to a mildly positive start to open the week
President Erdogan feeling a bit of a turkey as he loses again in re-run of Istanbul election
Lloyds Bank freezes off-shore accounts of clients who gave cold shoulder to proving identity
Caterpillar shares were expected to crawl lower Friday on downgrades, but managed to climb
Beyond Meat wilted 23.2% since Tuesday’s peak on competition and chemical concerns.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -2.95 (-0.23%) at 1,261 (YTD: 16.38%; 5YR: 51.0%)
MSCI AC World Equities (USD) down -21.41 (-0.23%) at 9,117 (YTD: 17.31%; 5YR: 42.0%)
Barclays Global Aggregate Bonds down -1.05 (-0.21%) at 503 (YTD: 5.07%; 5YR: 6.4%)

Selected Equity Indices (Capital returns)
S&P 500 down -3.72 (-0.13%) at 2,950 (YTD: 17.70%; 5YR: 51.3%)
NASDAQ down -19.63 (-0.24%) at 8,032 (YTD: 21.05%; 5YR: 84.6%)
Euro STOXX 50 down -1.16 (-0.03%) at 3,467 (YTD: 15.51%; 5YR: 5.5%)
FTSE 100 down -16.94 (-0.23%) at 7,408 (YTD: 10.10%; 5YR: 9.1%)
CAC 40 down -7.24 (-0.13%) at 5,528 (YTD: 16.86%; 5YR: 22.4%)
DAX down -15.47 (-0.13%) at 12,340 (YTD: 16.87%; 5YR: 24.2%)
Nikkei 225 up +27.35 (+0.13%) at 21,286 (YTD: 6.35%; 5YR: 38.4%)
Hang Seng up +17.13 (+0.06%) at 28,491 (YTD: 10.23%; 5YR: 24.5%)
MSCI Emerging Markets down -0.56 (-0.05%) at 1,053 (YTD: 9.05%; 5YR: 0.5%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.04 (began the year at 2.68; 5 years ago it was 2.58)
US 2 Year down -0.01 at 1.76 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year up +0.04 at 0.85 (began the year at 1.28; 5 years ago it was 2.73)
Germany 10 Year down -0.03 at -0.31 (began the year at 0.24; 5 years ago it was 1.32)
France 10 Year down -0.03 at 0.02 (began the year at 0.70; 5 years ago it was 1.76)
Italy 10 Year down -0.13 at 2.02 (began the year at 2.74; 5 years ago it was 2.88)
Japan 10 Year down -0.01 at -0.17 (began the year at -0.01; 5 years ago it was 0.58)
Barclays EM Basket up +0.01 at 5.89 (began the year at 6.22; 5 years ago it was 5.29)

Selected Currencies
$ weakened -0.0047 versus € (-0.41%) at 1.1388 ($: YTD: 0.56%; 5YR: 16.2%)
€ weakened -0.0006 versus £ (+0.05%) at 1.1208 (€: YTD: -0.70%; 5YR: 11.5%)
$ weakened -0.0057 versus £ (-0.45%) at 1.2763 ($: YTD: -0.13%; 5YR: 24.8%)
¥ strengthened +0.0600 versus $ (+0.06%) at 107.4300 (¥: YTD: -2.08%; 5YR: -5.0%)

Selected Commodities
Brent Crude ($/bbl) up +0.49 (+0.76%) at 65.32 (YTD: 22.85%; 5YR: -42.5%)
WTI Crude ($/bbl) up +0.63 (+1.11%) at 57.28 (YTD: 26.14%; 5YR: -46.6%)
Gold ($/ozt) up +5.31 (+0.38%) at 1404.91 (YTD: 9.55%; 5YR: 6.6%)
Copper ($/mt) down -2.00 (-0.03%) at 5971.00 (YTD: 0.10%; 5YR: -12.4%)

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