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22 March 2019

22/03/2019

Morning Chat and Market Data

Morning Chat 

So, March 29 looks to pass uneventfully: You may not have noticed the UK registered robust retail sales with broad-based gains pushing sales 0.4% when a decline of 0.4% was forecast. Nor the Bank of England unanimously vote to hold rates steady. The FTSE100’s 0.83% rally probably reflects the news. But with the Euro and sterling falling against the dollar, the news most noticed was the Brexit extension. The EU agreed a May 22 extension if May’s deal passes next week, or April 12, when a viable plan B (no-deal or longer extension and elections) is needed if it doesn’t.

News to dine out on: Darden Restaurants served up tasty results yesterday with shares up 6.87% their highest level since September last year. Their principal brand, Olive Garden, saw sales up 4.3% versus 3.4% expected continuing a 4½-year run of gains with “everyday value” and enough price increases to keep margins solid. LongHorn Steakhouse managed a near similar 3.8% increase in sales beating the 3.1% forecast after trimming the fat from their menu and pushing pricing 1.8% without much beef. Even sales at their new Cheddar’s acquisition were not as pungent as expected slipping only 2.7% versus the 3.2% expected.

Hopefully now only the cod is battered: October 10 last year Conagra completed their $10.66billion purchase of Pinnacle Foods. Given Pinnacle Foods – owner of US brands including Birds Eye, Duncan Hines and Wish-Bone – saw its share price soar from $20 on its initial offering in 2013 to $66 five years later, it was expected to skate through a successful integration. Mid-December Conagra released floundering numbers and the shares sunk. However, Conagra chipped in a more positive report today, with earnings per share of ¢51 versus ¢49 expected with $12million in synergy savings and lower costs. Result? Conagra shares leapt 12.75%

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +8.10 (+0.67%) at 1,225 (YTD: 13.10%; 5YR: 55.8%)
MSCI AC World Equities (USD) up +66.92 (+0.76%) at 8,824 (YTD: 13.54%; 5YR: 45.9%)
Barclays Global Aggregate Bonds up +1.12 (+0.23%) at 488 (YTD: 1.94%; 5YR: 5.3%)

Selected Equity Indices (Capital returns)
S&P 500 up +30.65 (+1.09%) at 2,855 (YTD: 13.88%; 5YR: 53.0%)
NASDAQ up +109.99 (+1.42%) at 7,839 (YTD: 18.14%; 5YR: 83.3%)
Euro STOXX 50 down -4.98 (-0.15%) at 3,367 (YTD: 12.19%; 5YR: 8.7%)
FTSE 100 up +64.30 (+0.88%) at 7,355 (YTD: 9.32%; 5YR: 12.2%)
CAC 40 down -3.81 (-0.07%) at 5,379 (YTD: 13.70%; 5YR: 24.1%)
DAX down -53.93 (-0.46%) at 11,550 (YTD: 9.39%; 5YR: 23.6%)
Nikkei 225 up +18.42 (+0.09%) at 21,627 (YTD: 8.06%; 5YR: 52.0%)
Hang Seng down -55.84 (-0.19%) at 29,016 (YTD: 12.27%; 5YR: 35.4%)
MSCI Emerging Markets up +1.22 (+0.11%) at 1,070 (YTD: 10.76%; 5YR: 13.2%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.52 (began the year at 2.68; 5 years ago it was 2.74)
US 2 Year down -0.01 at 2.40 (began the year at 2.49; 5 years ago it was 0.42)
UK 10 Year down -0.09 at 1.06 (began the year at 1.28; 5 years ago it was 2.75)
Germany 10 Year up +0.00 at 0.04 (began the year at 0.24; 5 years ago it was 1.63)
France 10 Year up +0.00 at 0.40 (began the year at 0.70; 5 years ago it was 2.16)
Italy 10 Year down -0.01 at 2.44 (began the year at 2.74; 5 years ago it was 3.41)
Japan 10 Year down -0.03 at -0.08 (began the year at -0.01; 5 years ago it was 0.59)
Barclays EM Basket down -0.02 at 5.97 (began the year at 6.22; 5 years ago it was 5.91)

Selected Currencies
$ weakened -0.0029 versus € (-0.26%) at 1.1382 ($: YTD: 0.61%; 5YR: 17.5%)
€ weakened -0.0032 versus £ (+0.28%) at 1.1536 (€: YTD: -3.52%; 5YR: 3.6%)
$ weakened -0.0066 versus £ (-0.51%) at 1.3127 ($: YTD: -2.99%; 5YR: 20.4%)
¥ strengthened +0.0900 versus $ (+0.08%) at 110.7600 (¥: YTD: 0.99%; 5YR: -7.7%)

Selected Commodities
Brent Crude ($/bbl) down -0.16 (-0.24%) at 67.38 (YTD: 26.73%; 5YR: -37.0%)
WTI Crude ($/bbl) unchanged 0.00 (0.00%) at 59.83 (YTD: 31.76%; 5YR: -40.2%)
Gold ($/ozt) up +2.71 (+0.21%) at 1312.10 (YTD: 2.31%; 5YR: -1.7%)
Copper ($/mt) down -36.00 (-0.56%) at 6421.00 (YTD: 7.64%; 5YR: -0.9%)

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