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21 June 2019

21/06/2019

Market Data and Morning Chat

Morning Chat

Change is not in the air: Wednesday, the US Fed held rates steady while describing the environment as a little softer than it had been have recently. Yesterday, the Bank of England also held rates and they cut their UK second quarter growth estimate from 0.2% to 0.0%. Mario Draghi, in replying to Donald Trump’s tweet attacking the European Central Bank, hinted at stimulus. The result has been to boost equity markets. Lifted by tech and energy shares, the S&P500 and Dow Jones registered new all-time highs, while this side of the Pond, European indices were up 0.4 to 0.8%.

A pricey mistake: Brent crude peaked a month ago at $74.70 before sliding back to $62.56 on Monday. West Texas went from $66.24 on April 23 down to $51.94 (though it has been a few pennies lower. Concern over growth and the counter-seasonal trend in inventories the cause. When tankers were attacked, oil rallied but only briefly. Attack a US drone however? Iran did and US President was quick to take to twitter to state only “Iran made a very big mistake!”. The effect? Oil leapt by $2.32 (Brent +3.7%) and $2.79 (WTI +5.2%). But will the price gains hold?

… and now for something completely different: The US is softening, China’s exports are slowing, Brexit is nudge, nudging closer (whatever it’s like). Yet there’s more going on. The Bank of Japan held rates at -0.1%. Nobody expected the Spanish industrial orders up 13.5% versus the forecast 2.8% and prior 2.2%. Surprise! What have the Romans done for us, aside from defying Brussels over growing debt levels? Whither Canada? Employment was disappointingly down 16,000 (not sure how many were lumberjacks). In Russia, unemployment fell to 4.5% and Putin accused the US of being very naughty boys in dealing with China.

… and then there were two – Gove goes along with Javid leaving Hunt v Johnson for the Tories
Three stripes and you’re out – Adidas stripes deemed not a logo, though shares continue to run
Airbus landed about an estimated $35billion in orders at Paris – but possibly so too Boeing
Carnival shares sink 7.7% after cutting revenue forecasts over renewed Cuban travel restrictions

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +9.37 (+0.75%) at 1,264 (YTD: 16.65%; 5YR: 50.6%)
MSCI AC World Equities (USD) up +91.79 (+1.01%) at 9,138 (YTD: 17.58%; 5YR: 41.6%)
Barclays Global Aggregate Bonds up +3.46 (+0.69%) at 504 (YTD: 5.29%; 5YR: 6.9%)

Selected Equity Indices (Capital returns)
S&P 500 up +27.72 (+0.95%) at 2,954 (YTD: 17.84%; 5YR: 50.5%)
NASDAQ up +64.02 (+0.80%) at 8,051 (YTD: 21.34%; 5YR: 84.3%)
Euro STOXX 50 up +13.38 (+0.39%) at 3,468 (YTD: 15.55%; 5YR: 5.0%)
FTSE 100 up +20.90 (+0.28%) at 7,424 (YTD: 10.35%; 5YR: 8.8%)
CAC 40 up +17.12 (+0.31%) at 5,536 (YTD: 17.01%; 5YR: 21.9%)
DAX up +46.86 (+0.38%) at 12,355 (YTD: 17.01%; 5YR: 23.7%)
Nikkei 225 up +128.99 (+0.60%) at 21,463 (YTD: 7.24%; 5YR: 39.8%)
Hang Seng up +348.29 (+1.23%) at 28,550 (YTD: 10.46%; 5YR: 23.1%)
MSCI Emerging Markets up +15.51 (+1.49%) at 1,054 (YTD: 9.11%; 5YR: 1.0%)

Selected Government Bond Yields
US 10 Year down -0.02 at 2.01 (began the year at 2.69; 5 years ago it was 2.63)
US 2 Year down -0.04 at 1.72 (began the year at 2.50; 5 years ago it was 0.45)
UK 10 Year down -0.05 at 0.81 (began the year at 1.27; 5 years ago it was 2.76)
Germany 10 Year down -0.03 at -0.32 (began the year at 0.24; 5 years ago it was 1.34)
France 10 Year down -0.03 at 0.01 (began the year at 0.71; 5 years ago it was 1.69)
Italy 10 Year down -0.03 at 2.07 (began the year at 2.75; 5 years ago it was 2.84)
Japan 10 Year down -0.01 at -0.15 (began the year at -0.01; 5 years ago it was 0.57)
Barclays EM Basket down -0.10 at 4.81 (began the year at 5.98; 5 years ago it was 4.64)

Selected Currencies
$ weakened +0.0076 versus € (+0.67%) at 1.1291 ($: YTD: -1.23%; 5YR: -16.8%)
€ strengthened -0.0014 versus £ (-0.13%) at 1.1248 (€: YTD: 0.96%; 5YR: -10.3%)
$ weakened +0.0069 versus £ (+0.55%) at 1.2701 ($: YTD: -0.28%; 5YR: -25.4%)
¥ strengthened -0.8650 versus $ (-0.80%) at 107.5400 (¥: YTD: -1.98%; 5YR: 5.3%)

Selected Commodities
Brent Crude ($/bbl) up +2.71 (+4.39%) at 64.49 (YTD: 27.53%; 5YR: -43.9%)
WTI Crude ($/bbl) up +3.41 (+6.35%) at 57.15 (YTD: 26.58%; 5YR: -46.5%)
Gold ($/ozt) up +35.45 (+2.64%) at 1379.50 (YTD: 7.86%; 5YR: 5.1%)
Copper ($/mt) up +67.00 (+1.14%) at 5962.00 (YTD: -0.05%; 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