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3 May 2019

03/05/2019

Morning Chat and Market Data

Morning Chat

Did you vote? 248 English councils, six mayors and all the Northern Irish councils held elections yesterday. We won’t have all the results until later today, but what we’ve seen so far points to a depressing day for Labour and the Conservatives. It has been a turbulent time for the Tories with Brexit at this stage remaining unresolved. But Mark Carney, Governor of the Bank of England commented that should there be a resolution to Brexit and growth and inflation continue to increase, then the Bank is likely to respond with rate hikes, although there was no rate change yesterday.

You know Trump’ll take credit: Earlier this week US GDP came in at 3.2% when analysts forecast 2.0%. Wednesday, ADP employment data – expected at about 180,000 – was nearly 100,000 higher at 275,000. Yesterday, the US had manufactured goods orders at 1.9%, beating the forecast 1.5% pace, while non-farm labour productivity rose by 3.6% - the best pace since 2014 – and well above the 2.2% expected level. GDP aside, they may not be the most quoted numbers but barring they’re fake news (ok, they not) they’re notable jumps indicating the US economy appears to be in beautiful health, big, beautiful health.

Tilting at cheese windmills: What do images of Don Quixote on food packaging bring to mind? La Mancha maybe? How about windmills or scrawny horses? Spanish cheesemaker Industrial Quesera Cuquerella was taken to court over their use of the images as it implied their cheese was “quesos manchegos” a Protected Geographical Indication for La Mancha cheeses. Cuquerella won earlier cases but now the European Court of Justice declared the images were an “unlawful evocation”. It means images as well as names could be protected under lucrative PGI schemes if it’s evocative of the designation. Brie-lliant news for some, stilton for others.

HSBC sees amazin’ Asian business and constrained costs to post 30.7% jump in profits
We weren’t sick enough for Reckitt’s health leading to slow start to 2019, but guidance reaffirmed
Vegan’s must be salivating at the 163% return from Beyond Meat on the first day of trading.
Teleflex had the right devices to boost revenues, confirm guidance and see shares leap 6.2%
Expedia share tripped by 3% as earnings checked-in a bit lighter than expected
Leading engineering construction firm Fluor was demolished by bad numbers, disappointing guidance and losing the CEO – share sank like a brick by 24.0%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -2.52 (-0.20%) at 1,255 (YTD: 15.83%; 5YR: 55.9%)
MSCI AC World Equities (USD) down -34.64 (-0.38%) at 8,999 (YTD: 15.80%; 5YR: 45.0%)
Barclays Global Aggregate Bonds down -1.72 (-0.35%) at 487 (YTD: 1.71%; 5YR: 3.4%)

Selected Equity Indices (Capital returns)
S&P 500 down -6.21 (-0.21%) at 2,918 (YTD: 16.38%; 5YR: 55.1%)
NASDAQ down -12.87 (-0.16%) at 8,037 (YTD: 21.12%; 5YR: 94.9%)
Euro STOXX 50 down -25.69 (-0.73%) at 3,489 (YTD: 16.24%; 5YR: 9.8%)
FTSE 100 down -33.95 (-0.46%) at 7,351 (YTD: 9.26%; 5YR: 7.8%)
CAC 40 down -47.55 (-0.85%) at 5,539 (YTD: 17.08%; 5YR: 24.2%)
DAX up +1.34 (+0.01%) at 12,345 (YTD: 16.92%; 5YR: 29.2%)
Nikkei 225 unchanged 0.00 (0.00%) at 22,259 (YTD: 11.21%; 5YR: 54.0%)
Hang Seng up +245.07 (+0.83%) at 29,944 (YTD: 15.86%; 5YR: 34.5%)
MSCI Emerging Markets down -1.53 (-0.14%) at 1,079 (YTD: 11.72%; 5YR: 7.5%)

Selected Government Bond Yields
US 10 Year up +0.03 at 2.55 (began the year at 2.69; 5 years ago it was 2.60)
US 2 Year up +0.05 at 2.34 (began the year at 2.50; 5 years ago it was 0.42)
UK 10 Year up +0.00 at 1.17 (began the year at 1.27; 5 years ago it was 2.64)
Germany 10 Year down -0.01 at 0.01 (began the year at 0.24; 5 years ago it was 1.45)
France 10 Year down -0.01 at 0.36 (began the year at 0.71; 5 years ago it was 1.93)
Italy 10 Year down -0.04 at 2.52 (began the year at 2.75; 5 years ago it was 3.04)
Japan 10 Year unchanged at -0.05 (began the year at -0.01; 5 years ago it was 0.61)
Barclays EM Basket up +0.02 at 5.26 (began the year at 5.98; 5 years ago it was 5.02)

Selected Currencies
$ strengthened -0.0057 versus € (-0.51%) at 1.1184 ($: YTD: -2.17%; 5YR: -19.3%)
€ weakened +0.0017 versus £ (+0.15%) at 1.1656 (€: YTD: 4.62%; 5YR: -4.2%)
$ strengthened -0.0047 versus £ (-0.36%) at 1.3036 ($: YTD: 2.35%; 5YR: -22.7%)
¥ weakened +0.3600 versus $ (+0.32%) at 111.5350 (¥: YTD: 1.66%; 5YR: 9.1%)

Selected Commodities
Brent Crude ($/bbl) down -1.48 (-2.05%) at 70.68 (YTD: 39.77%; 5YR: -34.2%)
WTI Crude ($/bbl) down -1.87 (-2.94%) at 61.75 (YTD: 36.77%; 5YR: -38.1%)
Gold ($/ozt) down -12.85 (-1.00%) at 1270.95 (YTD: -0.63%; 5YR: -0.8%)
Copper ($/mt) down -184.00 (-2.88%) at 6214.00 (YTD: 4.17%; 5YR: -7.2%)

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