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19 June 2019

19/06/2019

Market Data and Morning Chat

Morning Chat

All the little birdies go tweet, tweet, tweet: In a tweet, US President Donald Trump accused the European Central Bank of targeting the Euro. ECB head Mario Draghi denied the accusation saying the target was 2% inflation (now only 1.2%) and his rebuttal raised the probability of further stimulus. European equities reacted by rallying 2 to 2½%. In another tweet, Trump stated he “had a very good telephone conversation” with China’s President Xi, raising the possibility of a thaw in US-China trade talks and giving a strong 1 to 1½% boost to US equities. Not bad for a couple tweets.

… and they greased more than the equity markets: The importance of the US-China trade talks goes beyond equities. Their success or failure is expected to have a dramatic impact on economic growth and so in turn energy demand and industrial production. Oil prices rallied strongly yesterday, with West Texas Intermediate up 4.2% to $54.21 a barrel and Brent up 2.2% to $62.26. There’s still a way to go to close on the recent late-April highs, but it did help energy stocks generally outperform across jurisdictions. Meanwhile, the best performing sector was industrials, with some names up 4-6% or so.

… and then there were five: The Conservative MPs had their second vote on the range of candidates for the party leadership. The target was to hit 33 votes minimum (10.5%) to stay in the running. For Dominic Raab it was a hurdle a little to high as he garnered only 30 votes. Savid Javid clung on with the bare minimum while Boris Johnson remained the front-runner with 126 votes. In the follow-up debate, four of the five candidates committed to a Halloween Brexit or near enough increasing the perceived no-deal probability and knocking the pound to $1.2557 / €1.1193.

Round three of the leadership vote is today with the lowest scoring candidate being eliminated
Ashtead built up an expectation-beating set of results to see shares lead the FTSE100 at +6.1%
Micron Technology – almost a China tariffs option – processed a 5.7% rally on the trade news
Boeing shares took off up 5.4% after finally landing some new contracts at the Paris show
Chinese markets continue the positive run with Hang Seng up 2.4% and CSI300 up 1.9%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +12.25 (+0.99%) at 1,248 (YTD: 15.22%; 5YR: 48.8%)
MSCI AC World Equities (USD) up +84.52 (+0.95%) at 9,001 (YTD: 15.82%; 5YR: 39.4%)
Barclays Global Aggregate Bonds up +1.21 (+0.24%) at 500 (YTD: 4.34%; 5YR: 5.7%)

Selected Equity Indices (Capital returns)
S&P 500 up +28.08 (+0.97%) at 2,918 (YTD: 16.39%; 5YR: 48.9%)
NASDAQ up +108.86 (+1.39%) at 7,954 (YTD: 19.87%; 5YR: 82.5%)
Euro STOXX 50 up +69.68 (+2.06%) at 3,453 (YTD: 15.04%; 5YR: 4.2%)
FTSE 100 up +85.73 (+1.17%) at 7,443 (YTD: 10.63%; 5YR: 9.3%)
CAC 40 up +118.78 (+2.20%) at 5,510 (YTD: 16.47%; 5YR: 20.7%)
DAX up +245.93 (+2.03%) at 12,332 (YTD: 16.79%; 5YR: 23.3%)
Nikkei 225 up +361.16 (+1.72%) at 21,334 (YTD: 6.59%; 5YR: 38.9%)
Hang Seng up +639.41 (+2.33%) at 28,138 (YTD: 8.87%; 5YR: 21.5%)
MSCI Emerging Markets up +12.94 (+1.28%) at 1,024 (YTD: 6.02%; 5YR: -2.5%)

Selected Government Bond Yields
US 10 Year down 0.00 at 2.06 (began the year at 2.68; 5 years ago it was 2.62)
US 2 Year up +0.00 at 1.87 (began the year at 2.49; 5 years ago it was 0.45)
UK 10 Year down -0.04 at 0.81 (began the year at 1.28; 5 years ago it was 2.74)
Germany 10 Year up +0.01 at -0.31 (began the year at 0.24; 5 years ago it was 1.32)
France 10 Year up +0.01 at 0.02 (began the year at 0.70; 5 years ago it was 1.77)
Italy 10 Year up +0.01 at 2.12 (began the year at 2.74; 5 years ago it was 2.91)
Japan 10 Year down -0.01 at -0.14 (began the year at -0.01; 5 years ago it was 0.59)
Barclays EM Basket down -0.04 at 5.98 (began the year at 6.22; 5 years ago it was 5.30)

Selected Currencies
$ strengthened +0.0006 versus € (+0.05%) at 1.1195 ($: YTD: 2.24%; 5YR: 17.8%)
€ weakened -0.0009 versus £ (+0.08%) at 1.1215 (€: YTD: -0.76%; 5YR: 11.6%)
$ weakened -0.0002 versus £ (-0.02%) at 1.2555 ($: YTD: 1.50%; 5YR: 26.4%)
¥ strengthened +0.2000 versus $ (+0.18%) at 108.2600 (¥: YTD: -1.29%; 5YR: -5.9%)

Selected Commodities
Brent Crude ($/bbl) up +0.11 (+0.18%) at 62.64 (YTD: 17.81%; 5YR: -45.5%)
WTI Crude ($/bbl) up +1.97 (+3.79%) at 53.90 (YTD: 18.70%; 5YR: -49.1%)
Gold ($/ozt) down -1.54 (-0.11%) at 1345.08 (YTD: 4.88%; 5YR: 1.9%)
Copper ($/mt) up +104.00 (+1.78%) at 5949.00 (YTD: -0.27%; 5YR: -11.3%)

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