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22 May 2019

22/05/2019

Market Data and Morning Chat

Morning Chat

Boing: The US Commerce Department announced late Monday they would allow Huawei a grace period until August 19 during which the Chinese company could have access to US components and software. The concession was seized upon by investors as a ray of hope in the souring trade talks and markets saw a general rebound yesterday. The Chinese CSI300 index (+1.35%) lead Asian equity markets up, while the DAX (+0.84%, the FTSE100 was +0.39%) lead the major European indices. Across the Pond, the S&P500 also rallied, rising 0.85% and tempered a bit by the weaker-than-expected March US existing home sales data.

Boeing: The US aircraft-maker’ shares gained some altitude yesterday, rising 1.7% or about 6.7% from the mid-May lows. The 737Max is still not flying, but prospects are improving – a software fix should be under FAA review imminently. The key is the Maneuvering Characteristics Augmentation System or MCAS and whether the programming is at fault or an external factor triggered MCAS to erroneously intervene. A $276million lawsuit filed in Chicago alleges the pilots did not have the correct training to react to a faulty MCAS, but now a theory over bird-strike damage to the sensor is gaining credence with US officials.

Bond: The Federal Open Market Committee, the US Federal Reserve’s rate setters, meets today. While a rate hike is not expected, reading the tea-leaves of their commentary does give an indication of the direction of thought. Federal Reserve Chairman Jerome Powell’s speech earlier this week didn’t give much insight on rates, but did warn on corporate debt risks if the economy weakens. Yet yields are falling – and closer to this year’s lows than highs – as money flows into bonds. It means the US and indeed many global bond market trends are looking a bit more attractive than they have done.

PM May dangles a multitude of promises as she looks to get MayDeal IV to a vote in June.
Nike, Adidas and others put the boot into Trump over “catastrophic” effect of tariffs on poor.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +7.70 (+0.63%) at 1,227 (YTD: 13.25%; 5YR: 50.9%)
MSCI AC World Equities (USD) up +56.07 (+0.64%) at 8,845 (YTD: 13.81%; 5YR: 41.8%)
Barclays Global Aggregate Bonds down -0.51 (-0.10%) at 489 (YTD: 2.09%; 5YR: 3.8%)

Selected Equity Indices (Capital returns)
S&P 500 up +24.13 (+0.85%) at 2,864 (YTD: 14.26%; 5YR: 51.4%)
NASDAQ up +83.35 (+1.08%) at 7,786 (YTD: 17.34%; 5YR: 87.4%)
Euro STOXX 50 up +16.73 (+0.50%) at 3,387 (YTD: 12.83%; 5YR: 6.2%)
FTSE 100 up +18.04 (+0.25%) at 7,329 (YTD: 8.93%; 5YR: 7.5%)
CAC 40 up +26.87 (+0.50%) at 5,385 (YTD: 13.84%; 5YR: 20.3%)
DAX up +102.18 (+0.85%) at 12,143 (YTD: 15.01%; 5YR: 24.9%)
Nikkei 225 up +10.92 (+0.05%) at 21,283 (YTD: 6.34%; 5YR: 48.4%)
Hang Seng down -4.46 (-0.02%) at 27,653 (YTD: 6.99%; 5YR: 20.5%)
MSCI Emerging Markets up +4.89 (+0.49%) at 999 (YTD: 3.44%; 5YR: -4.1%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.42 (began the year at 2.68; 5 years ago it was 2.55)
US 2 Year down -0.01 at 2.24 (began the year at 2.49; 5 years ago it was 0.34)
UK 10 Year up +0.03 at 1.08 (began the year at 1.28; 5 years ago it was 2.65)
Germany 10 Year down -0.02 at -0.09 (began the year at 0.24; 5 years ago it was 1.41)
France 10 Year down -0.01 at 0.31 (began the year at 0.70; 5 years ago it was 1.82)
Italy 10 Year up +0.05 at 2.69 (began the year at 2.74; 5 years ago it was 3.24)
Japan 10 Year up +0.00 at -0.05 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket up +0.02 at 6.13 (began the year at 6.22; 5 years ago it was 5.49)

Selected Currencies
$ strengthened +0.0006 versus € (+0.05%) at 1.1154 ($: YTD: 2.60%; 5YR: 18.3%)
€ strengthened +0.0025 versus £ (-0.22%) at 1.1381 (€: YTD: -2.21%; 5YR: 8.5%)
$ strengthened +0.0035 versus £ (+0.27%) at 1.2695 ($: YTD: 0.40%; 5YR: 24.7%)
¥ strengthened +0.1700 versus $ (+0.15%) at 110.4900 (¥: YTD: 0.75%; 5YR: -7.9%)

Selected Commodities
Brent Crude ($/bbl) down -0.48 (-0.67%) at 71.55 (YTD: 34.57%; 5YR: -35.9%)
WTI Crude ($/bbl) down -0.11 (-0.17%) at 62.99 (YTD: 38.71%; 5YR: -39.7%)
Gold ($/ozt) down -1.51 (-0.12%) at 1273.14 (YTD: -0.73%; 5YR: -1.6%)
Copper ($/mt) down -33.00 (-0.55%) at 5996.00 (YTD: 0.52%; 5YR: -12.2%)

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