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20 June 2019

20/06/2019

Market Data and Morning Chat

Morning Chat

Evolution of a statement: Watching the US Federal Reserve is a matter of nuance. Reading the tea leaves. Interpreting vocabulary. Parsing the text of this month’s statement against the previous one you find the text evolves and thus insight into the changes in the Fed’s view can be gleaned. Yesterday’s statement notes the rising economic activity is growing at a “moderate” pace, not “solid”. Business fixed investment hasn’t “slowed”, but is “soft” and so on. It combines to give a moderated view of the economy and hints now at future rate cuts – just not this time as rates were held.

When a draw is good news: Draw might not be a favoured word for the Scots right now, but the crude oil inventory draw reported by the EIA yesterday capped the oil price decline and pumped through a small rally. It doesn’t change the longer trend though – prices have fallen for nearly two months. The decline is now flowing through into producer price inflation (PPI) which is easing from last month’s pace. German PPI fell from 2.5% to 1.9% – lower even than expected – while UK input PPI declined from 4.5% to 1.3% (though sterling weakness offset some of the decline).

Keeping America Great: Donald Trump launched his 2020 election campaign with a nod to his old slogan. So now it’s official – Trump wants four more years. At present, he’s polling at a 42.5% approval rating which, bar a couple days here and there, has pretty much been his high-water mark since about day 60 of his presidential tenure. That said, he fares pretty well in head-to-head polls when he’s at this level. For now, Democrat Joe Biden appears to be the leading candidate while Saunders is slipping slightly in favour of slightly-less-socialist Elizabeth Warren. Still a long road ahead though.

Rory Stewart misplaces 10 votes to become the latest victim in the Tory leadership race
The Bank of England rate decision comes at midday today with no change expected
UK Banks generally led the FTSE100 yesterday depositing solid 1½ to 3½% gains for investors.
Rio Tinto shares tempered by 4.5% decline over reduced iron ore guidance
Oracle, up 4.5%, found a silver lining in the Cloud with better-than-expected revenue growth
Allergan shares rally 6.2% after clearing their irritable bowel syndrome trial for drug Linzess
Whitbread shares slide as Premier Inns like-for-like demand more in Championship league

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +6.09 (+0.49%) at 1,254 (YTD: 15.79%; 5YR: 49.5%)
MSCI AC World Equities (USD) up +44.94 (+0.50%) at 9,046 (YTD: 16.40%; 5YR: 40.2%)
Barclays Global Aggregate Bonds up +1.07 (+0.21%) at 501 (YTD: 4.57%; 5YR: 6.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +8.71 (+0.30%) at 2,926 (YTD: 16.74%; 5YR: 49.1%)
NASDAQ up +33.44 (+0.42%) at 7,987 (YTD: 20.38%; 5YR: 82.9%)
Euro STOXX 50 up +1.81 (+0.05%) at 3,455 (YTD: 15.10%; 5YR: 4.6%)
FTSE 100 down -39.50 (-0.53%) at 7,404 (YTD: 10.04%; 5YR: 8.5%)
CAC 40 up +8.72 (+0.16%) at 5,518 (YTD: 16.65%; 5YR: 21.5%)
DAX down -23.22 (-0.19%) at 12,309 (YTD: 16.57%; 5YR: 23.2%)
Nikkei 225 up +128.99 (+0.60%) at 21,463 (YTD: 7.24%; 5YR: 39.8%)
Hang Seng up +244.65 (+0.87%) at 28,447 (YTD: 10.06%; 5YR: 22.6%)
MSCI Emerging Markets up +14.36 (+1.40%) at 1,038 (YTD: 7.51%; 5YR: -0.5%)

Selected Government Bond Yields
US 10 Year down -0.03 at 1.99 (began the year at 2.68; 5 years ago it was 2.61)
US 2 Year down -0.01 at 1.72 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year up +0.06 at 0.87 (began the year at 1.28; 5 years ago it was 2.76)
Germany 10 Year down -0.02 at -0.31 (began the year at 0.24; 5 years ago it was 1.34)
France 10 Year down -0.03 at 0.02 (began the year at 0.70; 5 years ago it was 1.79)
Italy 10 Year down -0.07 at 2.04 (began the year at 2.74; 5 years ago it was 2.95)
Japan 10 Year down -0.03 at -0.17 (began the year at -0.01; 5 years ago it was 0.58)
Barclays EM Basket down -0.02 at 5.96 (began the year at 6.22; 5 years ago it was 5.32)

Selected Currencies
$ weakened -0.0066 versus € (-0.59%) at 1.1281 ($: YTD: 1.49%; 5YR: 17.0%)
€ weakened -0.0002 versus £ (+0.02%) at 1.1266 (€: YTD: -1.21%; 5YR: 11.1%)
$ weakened -0.0074 versus £ (-0.59%) at 1.2708 ($: YTD: 0.30%; 5YR: 25.3%)
¥ strengthened +0.8000 versus $ (+0.74%) at 107.5600 (¥: YTD: -1.95%; 5YR: -5.0%)

Selected Commodities
Brent Crude ($/bbl) up +1.25 (+2.00%) at 63.63 (YTD: 19.67%; 5YR: -44.5%)
WTI Crude ($/bbl) down -0.14 (-0.26%) at 53.76 (YTD: 18.39%; 5YR: -49.5%)
Gold ($/ozt) up +24.65 (+1.81%) at 1385.08 (YTD: 8.00%; 5YR: 5.3%)
Copper ($/mt) down -31.00 (-0.52%) at 5918.00 (YTD: -0.79%; 5YR: -12.0%)

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