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13 March 2019

13/03/2019

Morning Chat and Market data

Morning Chat 

It was always going to be a tough sell: Initially, it looked like Theresa May came back from Europe with a way to solve the Backstop, but her Attorney General, Geoffrey Cox, diluted the solution by saying “nothing’s changed” (thought that’s her line) declaring the legal risk remains. Unhelpful, but Attorney Generals seem to be troubling Prime Ministers at present, just ask Trudeau. The European Research Group (Brexiteers) and Northern Irish DUP were not happy so it’s probably not a surprise May’s deal 2.0 was rejected 391 to 242. The pound’s back down at $1.3065 and next the no-deal vote.

Did you notice the other news? Led by Persimmon (+3.84%), Taylor Wimpey (+2.58%) and TUI (+2.54%), the FTSE100 closed up 0.41% which, given the tough-looking Brexit vote might seem surprising. However, a range of solid UK economic data provided the fillip. Month-on-month GDP for January came in at +0.5% versus the +0.2% anticipated on a strong construction gain. January’s month-on-month industrial and manufacturing production was +0.6% and +0.8% respectively, much more than the +0.2% forecast for each. It was the first rise in industrial production in six months thanks to welcome upswings in refined petroleum, plastic, metal and pharmaceutical products.

Banning Boeing to the Max: Boeing’s 737 Max 8, the Airbus A320 rival that sadly crashed Sunday has been on course to be a workhorse for airlines around the world. So far 350 have been delivered with thousands on order. While planes have crashed, it’s the characteristics of this crash that’s causing concern. The UK, France, and Germany, amongst others, are banning the plane from their airspace while others ground their fleets. Airline stocks are facing turbulence and Boeing is down about 12%. Remember how the US FAA grounded Boeing’s 787 in 2013? Boeing’s shares are four times higher now.

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +4.81 (+0.40%) at 1,202 (YTD: 10.97%; 5YR: 53.6%)
MSCI AC World Equities (USD) up +36.58 (+0.43%) at 8,634 (YTD: 11.10%; 5YR: 42.9%)
Barclays Global Aggregate Bonds up +1.07 (+0.22%) at 484 (YTD: 1.16%; 5YR: 3.8%)

Selected Equity Indices (Capital returns)
S&P 500 up +8.22 (+0.30%) at 2,792 (YTD: 11.36%; 5YR: 51.2%)
NASDAQ up +32.97 (+0.44%) at 7,591 (YTD: 14.40%; 5YR: 78.2%)
Euro STOXX 50 down -0.49 (-0.01%) at 3,304 (YTD: 10.08%; 5YR: 9.4%)
FTSE 100 up +20.53 (+0.29%) at 7,151 (YTD: 6.29%; 5YR: 9.1%)
CAC 40 up +4.29 (+0.08%) at 5,270 (YTD: 11.41%; 5YR: 24.0%)
DAX down -19.31 (-0.17%) at 11,524 (YTD: 9.14%; 5YR: 27.8%)
Nikkei 225 down -213.45 (-0.99%) at 21,290 (YTD: 6.37%; 5YR: 43.7%)
Hang Seng down -135.24 (-0.47%) at 28,786 (YTD: 11.37%; 5YR: 32.3%)
MSCI Emerging Markets up +10.37 (+1.00%) at 1,052 (YTD: 8.88%; 5YR: 11.5%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.61 (began the year at 2.68; 5 years ago it was 2.64)
US 2 Year up +0.01 at 2.46 (began the year at 2.49; 5 years ago it was 0.34)
UK 10 Year down -0.02 at 1.16 (began the year at 1.28; 5 years ago it was 2.69)
Germany 10 Year up +0.00 at 0.06 (began the year at 0.24; 5 years ago it was 1.54)
France 10 Year down 0.00 at 0.47 (began the year at 0.70; 5 years ago it was 2.14)
Italy 10 Year up +0.01 at 2.54 (began the year at 2.74; 5 years ago it was 3.43)
Japan 10 Year down -0.02 at -0.05 (began the year at -0.01; 5 years ago it was 0.64)
Barclays EM Basket down -0.01 at 6.01 (began the year at 6.22; 5 years ago it was 5.86)

Selected Currencies
$ strengthened +0.0005 versus € (+0.04%) at 1.1285 ($: YTD: 1.46%; 5YR: 18.6%)
€ weakened -0.0036 versus £ (+0.31%) at 1.1616 (€: YTD: -4.18%; 5YR: 3.3%)
$ weakened -0.0037 versus £ (-0.28%) at 1.3109 ($: YTD: -2.85%; 5YR: 21.2%)
¥ weakened -0.0100 versus $ (-0.01%) at 111.3200 (¥: YTD: 1.49%; 5YR: -8.5%)

Selected Commodities
Brent Crude ($/bbl) up +0.07 (+0.11%) at 66.39 (YTD: 24.86%; 5YR: -38.1%)
WTI Crude ($/bbl) up +0.08 (+0.14%) at 56.87 (YTD: 25.24%; 5YR: -42.0%)
Gold ($/ozt) up +3.58 (+0.28%) at 1305.18 (YTD: 1.77%; 5YR: -4.7%)
Copper ($/mt) up +65.00 (+1.01%) at 6472.00 (YTD: 8.50%; 5YR: -0.5%)

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