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12 March 2019

12/03/2019

Morning Chat and Market Data

Morning Chat

So, what is happening with Brexit? Today sees “Meaningful Vote II”. A box office flop last time around, the expectation was a defeat again – but maybe not? On Sunday, Prime Minister May rejected a new EU proposal – essentially a rehash of an old script no one wanted to see the first time. Yesterday, however, May headed to Strasbourg for last-minute talks with EU Commission President Jean-Claude Juncker, and she secured a re-write. The “joint legally-binding instrument” adds a formal dispute process and a declaration to replace the backstop by 2020. Enough? We’ll see, but sterling rallied ¢2 on the announcement.

The deal no one’s confirming: Commerzbank and Deutsche Bank rallied 7.15% and 4.96% respectively yesterday over an anticipated merger deal. At best, German Finance Minster Olaf Schulz notes “there are consultations about the situation” and informal talks occurring but there’s nothing substantive yet. However, Deutsche’s gain, coupled with decent jumps in Linde and Wirecard (up 13.3% in two trading days to €133 over the imminent release of the anti-corruption report) delivered 40% of yesterday’s 0.75% gain by the DAX. It helps take the sting from the disappointing 0.8% month-on-month decline in German industrial production rather than the 0.5% gain expected.

January sales: The US Census Bureau released their monthly retail sales numbers and they were therapeutic. January sales excluding automobiles rose 0.9% month-on-month tripling the 0.3% forecast and a strong reversal of December’s -2.1% (revised from -1.8%). Moreover, it is one of the stronger January levels over the last 25 years. It doesn’t compensate for the December drop, but does help. US tech investors thought so triggering a 2.17% sector rally pushing the S&P500 up 1.47%. Better still, yesterday’s inflation expectations survey showed a marked drop from 3.0% to 2.8% - an 18-month low – helping keep rate fears at bay.

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +13.01 (+1.10%) at 1,197 (YTD: 10.52%; 5YR: 51.6%)
MSCI AC World Equities (USD) up +97.62 (+1.15%) at 8,597 (YTD: 10.62%; 5YR: 41.1%)
Barclays Global Aggregate Bonds down -0.01 (0.00%) at 483 (YTD: 0.94%; 5YR: 4.0%)

Selected Equity Indices (Capital returns)
S&P 500 up +40.23 (+1.47%) at 2,783 (YTD: 11.03%; 5YR: 49.0%)
NASDAQ up +149.92 (+2.02%) at 7,558 (YTD: 13.91%; 5YR: 74.8%)
Euro STOXX 50 up +20.84 (+0.63%) at 3,304 (YTD: 10.10%; 5YR: 7.8%)
FTSE 100 up +26.31 (+0.37%) at 7,131 (YTD: 5.98%; 5YR: 7.7%)
CAC 40 up +34.74 (+0.66%) at 5,266 (YTD: 11.31%; 5YR: 22.3%)
DAX up +85.64 (+0.75%) at 11,543 (YTD: 9.32%; 5YR: 25.6%)
Nikkei 225 up +378.60 (+1.79%) at 21,504 (YTD: 7.44%; 5YR: 45.0%)
Hang Seng up +378.38 (+1.33%) at 28,882 (YTD: 11.75%; 5YR: 31.9%)
MSCI Emerging Markets up +11.02 (+1.07%) at 1,041 (YTD: 7.80%; 5YR: 10.2%)

Selected Government Bond Yields
US 10 Year up +0.02 at 2.66 (began the year at 2.68; 5 years ago it was 2.73)
US 2 Year up +0.02 at 2.49 (began the year at 2.49; 5 years ago it was 0.36)
UK 10 Year down -0.01 at 1.18 (began the year at 1.28; 5 years ago it was 2.75)
Germany 10 Year up +0.01 at 0.08 (began the year at 0.24; 5 years ago it was 1.60)
France 10 Year up +0.06 at 0.47 (began the year at 0.70; 5 years ago it was 2.18)
Italy 10 Year down -0.03 at 2.53 (began the year at 2.74; 5 years ago it was 3.42)
Japan 10 Year up +0.00 at -0.04 (began the year at -0.01; 5 years ago it was 0.63)
Barclays EM Basket down 0.00 at 6.02 (began the year at 6.22; 5 years ago it was 5.85)

Selected Currencies
$ weakened -0.0016 versus € (-0.14%) at 1.1258 ($: YTD: 1.69%; 5YR: 19.0%)
€ weakened -0.0038 versus £ (+0.32%) at 1.1729 (€: YTD: -5.11%; 5YR: 1.9%)
$ weakened -0.0058 versus £ (-0.44%) at 1.3203 ($: YTD: -3.59%; 5YR: 20.5%)
¥ weakened -0.0800 versus $ (-0.07%) at 111.3100 (¥: YTD: 1.48%; 5YR: -7.8%)

Selected Commodities
Brent Crude ($/bbl) up +0.10 (+0.15%) at 66.18 (YTD: 24.47%; 5YR: -38.6%)
WTI Crude ($/bbl) up +0.72 (+1.28%) at 56.79 (YTD: 25.06%; 5YR: -43.2%)
Gold ($/ozt) up +2.89 (+0.22%) at 1296.32 (YTD: 1.08%; 5YR: -5.2%)
Copper ($/mt) up +12.00 (+0.19%) at 6407.00 (YTD: 7.41%; 5YR: -1.1%)

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