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18 March 2019

18/03/2019

Morning Chat and Market Data

Morning Chat 

Week out, Week in: With a down week starting the month, last week saw broad-based equity gains leaving most markets positive for March after Chinese Xinhua news reported of progress in the US-China trade talks. The FTSE100 rallied 1.75%, Dax 1.99%, CAC 3.33%, S&P500 2.89% and Hang Seng 2.78%. While a final deal-signing appears delayed to April, we still get US factory orders, UK employment data, retail sales and inflation data and European consumer confidence numbers this week giving further evidence of the economic picture. The week also sees interest rate decisions from the US Fed and Bank of England.

But it wasn’t all roses: Yes, the US-China trade news was optimistic, but the US manufacturing and industrial situation wasn’t as rosy as hoped. The New York Empire State Manufacturing index – a useful indicator of activity on the east coast – was only 3.7 rather than the 10 expected; that was the lowest level in nearly 2 years. Another thorny set of data was the month-on-month manufacturing and industrial production data for February. They came in at -0.4% and +0.1% (a 13-month low) respectively, rather than the +0.3% and +0.4% expected (respectively) on weakness in non-metallic mineral, machinery and furniture production.

It’s still recession, but…: ItalianQ4 GDP was finalised at -0.1%, marginally better than the -0.2% initially calculated. Italy is in recession, but with two quarters of -0.1% rather than a deteriorating situation. But that the past, how’s about now? Friday saw industrial orders and sales data, with the industrial sector accounting for about 21% of GDP. January’s Industrial orders were +1.8%, slightly ahead of the +1.5% expected, and reversing December’s -1.4%. Industrial sales were even stronger at +3.1% in January versus December’s -3.6%. Services, accounting for 66% of GDP are more important but it’s a good start to 2019

Deutsche Bank and Commerzbank officially confirm they are in merger talks

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +6.89 (+0.57%) at 1,215 (YTD: 12.11%; 5YR: 53.9%)
MSCI AC World Equities (USD) up +51.94 (+0.60%) at 8,743 (YTD: 12.49%; 5YR: 43.5%)
Barclays Global Aggregate Bonds up +0.83 (+0.17%) at 485 (YTD: 1.37%; 5YR: 4.0%)

Selected Equity Indices (Capital returns)
S&P 500 up +14.00 (+0.50%) at 2,822 (YTD: 12.59%; 5YR: 50.8%)
NASDAQ up +57.62 (+0.76%) at 7,689 (YTD: 15.87%; 5YR: 77.4%)
Euro STOXX 50 up +44.05 (+1.32%) at 3,386 (YTD: 12.82%; 5YR: 10.2%)
FTSE 100 up +42.85 (+0.60%) at 7,228 (YTD: 7.43%; 5YR: 9.4%)
CAC 40 up +55.54 (+1.04%) at 5,405 (YTD: 14.26%; 5YR: 25.3%)
DAX up +98.22 (+0.85%) at 11,686 (YTD: 10.67%; 5YR: 26.4%)
Nikkei 225 up +133.65 (+0.62%) at 21,585 (YTD: 7.84%; 5YR: 49.8%)
Hang Seng up +300.34 (+1.04%) at 29,313 (YTD: 13.41%; 5YR: 35.8%)
MSCI Emerging Markets up +9.10 (+0.87%) at 1,057 (YTD: 9.48%; 5YR: 11.0%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.60 (began the year at 2.68; 5 years ago it was 2.67)
US 2 Year up +0.00 at 2.44 (began the year at 2.49; 5 years ago it was 0.35)
UK 10 Year down -0.01 at 1.21 (began the year at 1.28; 5 years ago it was 2.68)
Germany 10 Year up +0.00 at 0.09 (began the year at 0.24; 5 years ago it was 1.57)
France 10 Year up +0.01 at 0.46 (began the year at 0.70; 5 years ago it was 2.12)
Italy 10 Year down -0.01 at 2.48 (began the year at 2.74; 5 years ago it was 3.36)
Japan 10 Year down 0.00 at -0.04 (began the year at -0.01; 5 years ago it was 0.62)
Barclays EM Basket up +0.02 at 6.04 (began the year at 6.22; 5 years ago it was 5.82)

Selected Currencies
$ weakened -0.0024 versus € (-0.21%) at 1.1344 ($: YTD: 0.94%; 5YR: 18.5%)
€ strengthened +0.0026 versus £ (-0.22%) at 1.1710 (€: YTD: -4.95%; 5YR: 1.7%)
$ strengthened +0.0002 versus £ (+0.02%) at 1.3283 ($: YTD: -4.21%; 5YR: 19.9%)
¥ weakened -0.0400 versus $ (-0.04%) at 111.5300 (¥: YTD: 1.68%; 5YR: -9.1%)

Selected Commodities
Brent Crude ($/bbl) up +0.18 (+0.27%) at 66.68 (YTD: 25.41%; 5YR: -37.4%)
WTI Crude ($/bbl) down -0.09 (-0.15%) at 58.52 (YTD: 28.87%; 5YR: -40.8%)
Gold ($/ozt) up +1.18 (+0.09%) at 1303.66 (YTD: 1.65%; 5YR: -3.8%)
Copper ($/mt) up +27.00 (+0.42%) at 6431.00 (YTD: 7.81%; 5YR: -0.6%)

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