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21 May 2019

21/05/2019

Market Data and Morning Chat

Morning Chat

No Huawei, Jose: When US President Donald Trump signed an Executive Order barring any transactions posing “an unacceptable risk” to national security, he was echoing China’s actions preventing or limiting American tech companies’ access to the Chinese market on security grounds. China’s Huawei quickly made the security risk list, and yesterday Google announced it had stopped licencing the Android operating system – plus Gmail, Maps, Play and other Google services to comply with the order. As the world’s second largest smartphone maker, losing Android is a crushing blow. Huawei could tumble much like ZTE last year, but for now remains defiant.

Chipping away: However, it’s not just Google that is cutting business ties with Huawei. Chip -makers Qualcomm, Intel and even Germany’s Infineon have all followed suit. Losing such a big client is not without pain. Qualcomm shares tumbled 6.0% and Intel’s 3.0%. Infineon led the DAX down with a 4.2% decline which helped to trim the German index by 1.8%. Meanwhile in the US, the S&P500 technology index, not unsurprisingly, slipped 1.8% led by chip and component makers such as those above plus others including Broadcom, Applied Materials, Lam Research and Micron Technology – all were down by 4.0% or more.

A kind of good news, bad news thing: Japan has seen better-than-expected data that hints at some caution all the same. Along side yesterday’s industrial production data – which showed a better-than-expected 4.3% decline for March year-on-year – Japan released preliminary GDP data very late on Sunday. The Q1 GDP data was a better-than-expected +2.1% – way ahead of the -0.2% forecast – but still somewhat disappointing. The problem is the growth was spurred by a shift in the trade balance, with imports falling by a decade-worst 4.6% and exports only falling 2.4%. It hints that the domestic economy faces a weakening of demand.

Trump’s Administration stated companies have to August 19 to be in compliance with the order.
Positively though, today’s futures are pointing up 0.35% to 0.55% with the CSI300 up 1.34%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -6.48 (-0.53%) at 1,219 (YTD: 12.54%; 5YR: 50.6%)
MSCI AC World Equities (USD) down -46.77 (-0.53%) at 8,789 (YTD: 13.09%; 5YR: 41.4%)
Barclays Global Aggregate Bonds down -0.34 (-0.07%) at 489 (YTD: 2.20%; 5YR: 3.9%)

Selected Equity Indices (Capital returns)
S&P 500 down -19.30 (-0.67%) at 2,840 (YTD: 13.30%; 5YR: 50.4%)
NASDAQ down -113.91 (-1.46%) at 7,702 (YTD: 16.08%; 5YR: 86.4%)
Euro STOXX 50 down -55.86 (-1.63%) at 3,370 (YTD: 12.27%; 5YR: 5.7%)
FTSE 100 down -37.74 (-0.51%) at 7,311 (YTD: 8.66%; 5YR: 7.2%)
CAC 40 down -79.64 (-1.46%) at 5,359 (YTD: 13.27%; 5YR: 19.9%)
DAX down -197.65 (-1.61%) at 12,041 (YTD: 14.04%; 5YR: 24.2%)
Nikkei 225 down -29.28 (-0.14%) at 21,272 (YTD: 6.28%; 5YR: 51.5%)
Hang Seng down -27.54 (-0.10%) at 27,760 (YTD: 7.41%; 5YR: 21.6%)
MSCI Emerging Markets down -2.31 (-0.23%) at 994 (YTD: 2.93%; 5YR: -3.6%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.41 (began the year at 2.68; 5 years ago it was 2.53)
US 2 Year up +0.00 at 2.22 (began the year at 2.49; 5 years ago it was 0.34)
UK 10 Year up +0.02 at 1.06 (began the year at 1.28; 5 years ago it was 2.65)
Germany 10 Year up +0.00 at -0.09 (began the year at 0.24; 5 years ago it was 1.42)
France 10 Year up +0.00 at 0.31 (began the year at 0.70; 5 years ago it was 1.84)
Italy 10 Year down -0.01 at 2.69 (began the year at 2.74; 5 years ago it was 3.20)
Japan 10 Year down 0.00 at -0.05 (began the year at -0.01; 5 years ago it was 0.59)
Barclays EM Basket down -0.04 at 6.11 (began the year at 6.22; 5 years ago it was 5.49)

Selected Currencies
$ strengthened +0.0020 versus € (+0.18%) at 1.1148 ($: YTD: 2.65%; 5YR: 18.4%)
€ weakened -0.0010 versus £ (+0.09%) at 1.1402 (€: YTD: -2.39%; 5YR: 8.3%)
$ strengthened +0.0013 versus £ (+0.10%) at 1.2710 ($: YTD: 0.28%; 5YR: 24.7%)
¥ weakened -0.1700 versus $ (-0.15%) at 110.1400 (¥: YTD: 0.44%; 5YR: -7.9%)

Selected Commodities
Brent Crude ($/bbl) down -0.03 (-0.04%) at 72.48 (YTD: 36.32%; 5YR: -35.2%)
WTI Crude ($/bbl) up +0.34 (+0.54%) at 63.10 (YTD: 38.96%; 5YR: -38.4%)
Gold ($/ozt) down -2.62 (-0.20%) at 1275.19 (YTD: -0.57%; 5YR: -1.3%)
Copper ($/mt) down -27.00 (-0.45%) at 6029.00 (YTD: 1.07%; 5YR: -12.4%)

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