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26 June 2019

26/06/2019

Market Data and Morning Chat

Morning Chat

A bit of redness: Equities across developed markets saw red yesterday with most down between 0.5 to 1.0%, and the Nasdaq100 down 1.7%. We saw a negative tone almost from the get-go with media assumptions focussing on the increased US-Iran tensions after the US specifically targeted sanctions against Ayatollah Ali Khamenei and other senior Iranian leaders. US markets were at the lower end of the scale, but it probably didn’t help US markets with new home sales falling 7.8% when expected to rise 1.9% and coming on top of last week’s weaker-than-forecast housing starts and existing home sales data too.

Any Rome to maneuver? Despite others skirting the fiscal rules at varying times, Brussels seems particularly agitated by the Italians. Before Christmas, the Italians proposed a plan for a high-but-in-limits 2.4% budget deficit, but it was more than the EU Commission expected Euro-zone nations to hold to. France rescued Italy from the naughty step then as Macron blew out his budget appeasing the Yellow Vests. However, now it’s the lack of progress on the 2020 numbers that have EU officials poised to bring out the disciplinary measures by early July. Unsurprisingly, the Italians disagree claiming a strengthening economy will help.

The wrinkle in AbbVie’s bid for Allergan: Shares in Allergan – the botox-specialist pharmaceuticals company – certainly weren’t paralysed leaping 25.4% on news of a $63billion cash & shares bid by AbbVie ($120.30 and 0.866 AbbVie shares per Allergan share). Conversely, AbbVie shares sunk 16.3% over the high premium being paid. However, the bid could be the medicine both need. AbbVie is heavily reliant on one drug, Humira, and the patent is due to run out by 2023. True, there’s little in common between the two firms, but Allergan’s products will benefit from AbbVie’s cash flow and the new company’s increased scale.

BMW unveils the Vision M Next and sees a doubling of EV and hybrid vehicles possible by 2021
Micron ( up 8.3%) numbers fell across every metric, but, I should chip in, by less than expected
Kellogg shares weeeren’t great! down 2.3% as increased grain prices hit margins.
London exchanges will not be able to trade Swiss shares after June 30 as Swiss cheesed off by EU

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -8.75 (-0.70%) at 1,250 (YTD: 15.41%; 5YR: 49.8%)
MSCI AC World Equities (USD) down -60.30 (-0.66%) at 9,057 (YTD: 16.53%; 5YR: 41.1%)
Barclays Global Aggregate Bonds up +0.72 (+0.14%) at 506 (YTD: 5.65%; 5YR: 6.6%)

Selected Equity Indices (Capital returns)
S&P 500 down -27.97 (-0.95%) at 2,917 (YTD: 16.38%; 5YR: 49.1%)
NASDAQ down -120.98 (-1.51%) at 7,885 (YTD: 18.83%; 5YR: 80.1%)
Euro STOXX 50 down -11.21 (-0.32%) at 3,444 (YTD: 14.76%; 5YR: 6.5%)
FTSE 100 up +5.74 (+0.08%) at 7,422 (YTD: 10.32%; 5YR: 10.2%)
CAC 40 down -7.14 (-0.13%) at 5,515 (YTD: 16.57%; 5YR: 24.2%)
DAX down -46.13 (-0.38%) at 12,228 (YTD: 15.81%; 5YR: 24.7%)
Nikkei 225 down -107.22 (-0.51%) at 21,087 (YTD: 5.36%; 5YR: 37.7%)
Hang Seng up +42.08 (+0.15%) at 28,228 (YTD: 9.22%; 5YR: 21.7%)
MSCI Emerging Markets down -7.76 (-0.74%) at 1,045 (YTD: 8.23%; 5YR: -0.1%)

Selected Government Bond Yields
US 10 Year up +0.02 at 2.00 (began the year at 2.68; 5 years ago it was 2.53)
US 2 Year down 0.00 at 1.73 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year down -0.02 at 0.79 (began the year at 1.28; 5 years ago it was 2.64)
Germany 10 Year up +0.02 at -0.31 (began the year at 0.24; 5 years ago it was 1.24)
France 10 Year up +0.02 at 0.02 (began the year at 0.70; 5 years ago it was 1.68)
Italy 10 Year down -0.14 at 2.02 (began the year at 2.74; 5 years ago it was 2.84)
Japan 10 Year down -0.01 at -0.17 (began the year at -0.01; 5 years ago it was 0.57)
Barclays EM Basket up +0.01 at 5.90 (began the year at 6.22; 5 years ago it was 5.27)

Selected Currencies
$ strengthened +0.0001 versus € (+0.01%) at 1.1362 ($: YTD: 0.79%; 5YR: 16.5%)
€ strengthened +0.0020 versus £ (-0.18%) at 1.1151 (€: YTD: -0.19%; 5YR: 12.1%)
$ strengthened +0.0024 versus £ (+0.19%) at 1.2669 ($: YTD: 0.60%; 5YR: 25.6%)
¥ weakened -0.1500 versus $ (-0.14%) at 107.3900 (¥: YTD: -2.11%; 5YR: -5.4%)

Selected Commodities
Brent Crude ($/bbl) up +0.39 (+0.60%) at 65.43 (YTD: 23.06%; 5YR: -42.1%)
WTI Crude ($/bbl) down -0.11 (-0.19%) at 57.59 (YTD: 26.82%; 5YR: -46.3%)
Gold ($/ozt) down -14.39 (-1.01%) at 1409.06 (YTD: 9.87%; 5YR: 7.0%)
Copper ($/mt) up +82.00 (+1.38%) at 6042.00 (YTD: 1.29%; 5YR: -12.6%)

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