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23 May 2019

23/05/2019

Market Data and Morning Chat

Morning Chat

May be not: The pound has faced a turbulent drop since the local elections, slipping from $1.3167 or €1.1767 on May 3 to £1.2655 and €1.1362 today – declines of 3.9% and 3.4% respectively. Versus the dollar, sterling slipped to levels last seen early-January and mid-February versus the Euro. The weakness corresponds to the deepening trauma seen in Parliament and the meteoric rise in the Brexit Party’s polling at the expense of the Tories. Moreover, Prime Minister May deal is looking like it may never make it to a vote let alone defeat. The same might be said of Theresa May.

The shape of things to come: European Parliamentary elections kick off in the UK today; other countries vote on various days to Sunday, but will the new Parliament be different? In the UK, the Brexit party is expected to take 25 seats, Labour 15, LibDems 12 and Conservatives a dismal 7. Europe-wide though, the ruling triumvirate of centre-right European People’s Party, Socialists & Democrats and Liberal Democrats while slipping from 472 seats to 422 (216 to 171, 187 to 144 and 68 to 107 respectively), still have enough to govern, with anti-EU parties only increasing from 78 to 122 seats.

Patience is a virtue: The US Federal Reserve surprised no-one by announcing no change in the Fed Funds rate, keeping it, technically, at a range of 2.25% to 2.25%. Correspondingly, there was little change in the key US investment numbers. The 10-year bond yield moved 0.01% - barely noticeable – and the S&P500 slipped 0.28% more on global conditions than the Fed. Indeed, the Committee members agreed noted that a “patient approach” over rate setting was prudent whether the global economic conditions improve or not. In other words, it looks like the Fed rate is not changing much any time soon.

Wirecard looks to falter a bit today as shares have rallied up 19.9% to €159 on 7-day win streak
Defense contractor Babcock posts sub-par profits as shares dive 9.3%
M&S shares down 9.4% as profits lose some sparkle dropping 10% on 3.3% revenue decline.
US judge rules Qualcomm illegally suppressed competition, chipping 10.9% of the share price.
US retailer Target hits the bullseye with sales pushing shares up 7.8%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -2.46 (-0.20%) at 1,224 (YTD: 13.02%; 5YR: 50.0%)
MSCI AC World Equities (USD) down -24.23 (-0.27%) at 8,821 (YTD: 13.50%; 5YR: 40.9%)
Barclays Global Aggregate Bonds up +0.28 (+0.06%) at 489 (YTD: 2.15%; 5YR: 3.9%)

Selected Equity Indices (Capital returns)
S&P 500 down -8.09 (-0.28%) at 2,856 (YTD: 13.94%; 5YR: 50.3%)
NASDAQ down -34.88 (-0.45%) at 7,751 (YTD: 16.81%; 5YR: 85.2%)
Euro STOXX 50 up +0.21 (+0.01%) at 3,387 (YTD: 12.84%; 5YR: 5.7%)
FTSE 100 up +5.27 (+0.07%) at 7,334 (YTD: 9.01%; 5YR: 7.6%)
CAC 40 down -6.48 (-0.12%) at 5,379 (YTD: 13.70%; 5YR: 19.7%)
DAX up +25.27 (+0.21%) at 12,169 (YTD: 15.25%; 5YR: 24.6%)
Nikkei 225 down -132.23 (-0.62%) at 21,151 (YTD: 5.68%; 5YR: 46.3%)
Hang Seng down -447.63 (-1.62%) at 27,258 (YTD: 5.47%; 5YR: 18.7%)
MSCI Emerging Markets down -0.97 (-0.10%) at 998 (YTD: 3.34%; 5YR: -4.3%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.38 (began the year at 2.68; 5 years ago it was 2.53)
US 2 Year down -0.01 at 2.21 (began the year at 2.49; 5 years ago it was 0.34)
UK 10 Year down -0.07 at 1.02 (began the year at 1.28; 5 years ago it was 2.64)
Germany 10 Year up +0.00 at -0.09 (began the year at 0.24; 5 years ago it was 1.41)
France 10 Year up +0.01 at 0.31 (began the year at 0.70; 5 years ago it was 1.82)
Italy 10 Year up +0.06 at 2.69 (began the year at 2.74; 5 years ago it was 3.15)
Japan 10 Year up +0.01 at -0.05 (began the year at -0.01; 5 years ago it was 0.59)
Barclays EM Basket down 0.00 at 6.13 (began the year at 6.22; 5 years ago it was 5.48)

Selected Currencies
$ strengthened +0.0005 versus € (+0.04%) at 1.1152 ($: YTD: 2.62%; 5YR: 18.2%)
€ strengthened +0.0022 versus £ (-0.19%) at 1.1339 (€: YTD: -1.84%; 5YR: 8.8%)
$ strengthened +0.0031 versus £ (+0.24%) at 1.2644 ($: YTD: 0.80%; 5YR: 24.8%)
¥ weakened -0.0700 versus $ (-0.06%) at 110.3200 (¥: YTD: 0.60%; 5YR: -7.6%)

Selected Commodities
Brent Crude ($/bbl) down -0.51 (-0.72%) at 70.33 (YTD: 32.27%; 5YR: -37.0%)
WTI Crude ($/bbl) down -1.77 (-2.81%) at 61.22 (YTD: 34.82%; 5YR: -41.2%)
Gold ($/ozt) up +1.06 (+0.08%) at 1274.36 (YTD: -0.63%; 5YR: -1.4%)
Copper ($/mt) down -68.00 (-1.13%) at 5928.00 (YTD: -0.62%; 5YR: -13.8%)

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