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12 June 2019

12/06/2019

Market Data and Morning Chat

Morning Chat

Jobs for the boys (and girls): The last time the UK unemployment rate was as low as February to April’s 3.8% was back in late 1974 when the European Council was debating the formation of the European Parliament, Greece had just ceased being a monarchy and Franco had a year to go in Spain. Moreover, the 76.1% employment rate is the joint-highest on record with the 72.0% for women the highest recorded and economic inactivity at a near-record low. We’re also seeing near-cycle high 3.4% regular-pay wage growth too (1.5% after accounting for inflation). Not bad for a Brexit-edge economy.

Not too cheesy: Dominated by Nestle, healthcare and financial companies, the Swiss Market Index doesn’t get as much mention as European peers DAX, CAC and FTSE100, but it’s having a better 2019 so far, up 16.9% after Tuesday’s 1.3% rally. Moreover, the index registered a new record intra-day high of 9864. In comparison, the others remain well below past highs; FTSE100 5.7% lower, the DAX 10.6%, Italy’s MIB 15.7% and France’s CAC 18.7% - with that high nearly 20 years ago in 2000! Global titan Nestle’s helped, up 26.4% year-to-date, but so too majors LafargeHolcim (25.8%) and lesser-highlighted Richemont (29.5%).

But the US was mildly disappointing: After a good start to the month, US equity indices slipped – only slightly, but slipped. The S&P500 fell 0.04%, the Nasdaq 0.01% and the Dow 0.05%. As noted – only slightly – but with good news over President Trump’s indefinite suspension of Mexican tariffs and the increased prospects of a lower Fed rate many thought the gains should continue. However, the US-China trade negotiations remains the key factor and the higher-than-expected 0.6% month-on-month producer price inflation (versus 0.3% expected) and underwhelming IBD economic optimism (53.2 versus 59.2 expected) data reminded investors a deal is still needed.

Halma was on fire as the safety products firm rallied 4.1% on 13% rise in revenues
Raytheon and United Tech slip a further 5.1% and 4.0% respectively on merger plans
Regions Financial banked a 3.4% gain despite rising hopes of rate cut

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +3.56 (+0.29%) at 1,240 (YTD: 14.43%; 5YR: 49.2%)
MSCI AC World Equities (USD) up +18.41 (+0.21%) at 8,951 (YTD: 15.17%; 5YR: 40.5%)
Barclays Global Aggregate Bonds up +0.16 (+0.03%) at 499 (YTD: 4.24%; 5YR: 5.9%)

Selected Equity Indices (Capital returns)
S&P 500 down -1.01 (-0.03%) at 2,886 (YTD: 15.11%; 5YR: 49.5%)
NASDAQ down -0.60 (-0.01%) at 7,823 (YTD: 17.89%; 5YR: 82.0%)
Euro STOXX 50 up +14.65 (+0.43%) at 3,401 (YTD: 13.32%; 5YR: 3.6%)
FTSE 100 up +22.91 (+0.31%) at 7,398 (YTD: 9.96%; 5YR: 8.1%)
CAC 40 up +25.95 (+0.48%) at 5,408 (YTD: 14.33%; 5YR: 18.8%)
DAX up +110.43 (+0.92%) at 12,156 (YTD: 15.12%; 5YR: 22.3%)
Nikkei 225 down -74.56 (-0.35%) at 21,130 (YTD: 5.57%; 5YR: 41.1%)
Hang Seng down -559.88 (-2.01%) at 27,229 (YTD: 5.35%; 5YR: 17.5%)
MSCI Emerging Markets up +9.82 (+0.96%) at 1,032 (YTD: 6.84%; 5YR: -2.2%)

Selected Government Bond Yields
US 10 Year down -0.02 at 2.13 (began the year at 2.68; 5 years ago it was 2.60)
US 2 Year down -0.03 at 1.90 (began the year at 2.49; 5 years ago it was 0.44)
UK 10 Year down -0.02 at 0.84 (began the year at 1.28; 5 years ago it was 2.72)
Germany 10 Year down -0.01 at -0.24 (began the year at 0.24; 5 years ago it was 1.39)
France 10 Year down -0.01 at 0.11 (began the year at 0.70; 5 years ago it was 1.76)
Italy 10 Year down -0.02 at 2.38 (began the year at 2.74; 5 years ago it was 2.82)
Japan 10 Year down 0.00 at -0.12 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket down -0.02 at 6.09 (began the year at 6.22; 5 years ago it was 5.29)

Selected Currencies
$ weakened -0.0004 versus € (-0.04%) at 1.1333 ($: YTD: 1.04%; 5YR: 16.3%)
€ strengthened +0.0003 versus £ (-0.03%) at 1.1231 (€: YTD: -0.90%; 5YR: 10.5%)
$ weakened -0.0001 versus £ (-0.01%) at 1.2728 ($: YTD: 0.14%; 5YR: 24.3%)
¥ strengthened +0.1400 versus $ (+0.13%) at 108.3200 (¥: YTD: -1.24%; 5YR: -5.9%)

Selected Commodities
Brent Crude ($/bbl) down -0.91 (-1.45%) at 61.96 (YTD: 16.53%; 5YR: -45.0%)
WTI Crude ($/bbl) up +0.01 (+0.02%) at 53.27 (YTD: 17.31%; 5YR: -49.0%)
Gold ($/ozt) up +8.34 (+0.63%) at 1335.19 (YTD: 4.11%; 5YR: 4.8%)
Copper ($/mt) up +2.00 (+0.03%) at 5876.00 (YTD: -1.49%; 5YR: -12.2%)

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