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24 May 2019

24/05/2019

Market Data and Morning Chat

Morning Chat

Modi Operandi: Over the last five weeks a tenth of the world’s population have gone to the polls in India to vote for their Lok Sabha – the 543 seat lower house of Parliament - representative. The centre-right National Democratic Alliance, of which Prime Minster Narendra Modi’s Bharatiya Janata Party (BJP) is the largest member, was expected to struggle to maintain their majority because of farmers’ protests and rising unemployment. They had 336 of which 282 were from the BJP. The results have the BJP projected to get 300 seats alone and about 350 including allies. That’ll give room to operate.

Not from a lack of refinement: Crude oil inventories built further – a near two-year high – according to the American Petroleum Institute and Energy Information Administration. Problem is this time of year inventories should be falling. It’s not a lack of refining capacity – refiners are near 90% – and moreover the end product inventories (gasoline and distillates) are building too. The lack of demand is blamed on the escalating trade war; maybe it is, but the effect on prices is certain. West Texas Intermediate fell 5.3% and Brent 4.4%. Oil investors didn’t like it., leaving the US energy sector 3.1% lower yesterday.

Another Pesky Market Indicator: With all the news you’ve seen on the US action against Huawei and the ongoing deterioration in the US-China trade talks, it is probably no surprise to hear the Markit chief economist say “business activity slowed sharply in May as trade war worries and increased uncertainty dealt a further blow to order book growth and business confidence,”. He was commenting on the US manufacturing PMI coming in at 50.6 – a near ten-year low – and notably below the 52.5 expected. The familiarity with the excuse is likely why the S&P500 was only down 1.9% and FTSE100 1.6%.

The defensive qualities of AstraZeneca appeal in the troubled times of May, with shares up 1.9%
At least the International Airlines Group likes low oil prices – shares flew up 1.3%
Autodesk was a bit of a cad, falling 8.9% in afterhours trading on a surprise loss on low revenues

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -14.29 (-1.17%) at 1,210 (YTD: 11.70%; 5YR: 48.3%)
MSCI AC World Equities (USD) down -99.82 (-1.13%) at 8,721 (YTD: 12.22%; 5YR: 39.3%)
Barclays Global Aggregate Bonds up +1.73 (+0.35%) at 491 (YTD: 2.51%; 5YR: 4.2%)

Selected Equity Indices (Capital returns)
S&P 500 down -34.03 (-1.19%) at 2,822 (YTD: 12.58%; 5YR: 48.5%)
NASDAQ down -122.56 (-1.58%) at 7,628 (YTD: 14.97%; 5YR: 82.2%)
Euro STOXX 50 down -59.52 (-1.76%) at 3,327 (YTD: 10.85%; 5YR: 3.9%)
FTSE 100 down -103.15 (-1.41%) at 7,231 (YTD: 7.47%; 5YR: 6.1%)
CAC 40 down -97.61 (-1.81%) at 5,281 (YTD: 11.64%; 5YR: 17.5%)
DAX down -216.33 (-1.78%) at 11,952 (YTD: 13.20%; 5YR: 22.4%)
Nikkei 225 down -33.92 (-0.16%) at 21,117 (YTD: 5.51%; 5YR: 46.0%)
Hang Seng up +66.80 (+0.24%) at 27,334 (YTD: 5.76%; 5YR: 19.0%)
MSCI Emerging Markets down -13.19 (-1.32%) at 985 (YTD: 1.97%; 5YR: -5.6%)

Selected Government Bond Yields
US 10 Year unchanged at 2.32 (began the year at 2.68; 5 years ago it was 0.00)
US 2 Year up +0.01 at 2.16 (began the year at 2.49; 5 years ago it was 0.00)
UK 10 Year down -0.06 at 0.95 (began the year at 1.28; 5 years ago it was 0.00)
Germany 10 Year up +0.01 at -0.11 (began the year at 0.24; 5 years ago it was 0.00)
France 10 Year up +0.00 at 0.28 (began the year at 0.70; 5 years ago it was 0.00)
Italy 10 Year down 0.00 at 2.63 (began the year at 2.74; 5 years ago it was 0.00)
Japan 10 Year down -0.01 at -0.07 (began the year at -0.01; 5 years ago it was 0.00)
Barclays EM Basket down -0.01 at 6.12 (began the year at 6.22; 5 years ago it was 0.00)

Selected Currencies
$ weakened -0.0019 versus € (-0.17%) at 1.1201 ($: YTD: 2.19%; 5YR: 17.8%)
€ strengthened +0.0013 versus £ (-0.11%) at 1.1324 (€: YTD: -1.71%; 5YR: 9.0%)
$ weakened -0.0005 versus £ (-0.04%) at 1.2683 ($: YTD: 0.49%; 5YR: 24.6%)
¥ weakened -0.0100 versus $ (-0.01%) at 109.5200 (¥: YTD: -0.13%; 5YR: -6.9%)

Selected Commodities
Brent Crude ($/bbl) up +0.48 (+0.71%) at 68.19 (YTD: 28.25%; 5YR: -39.0%)
WTI Crude ($/bbl) down -3.51 (-5.73%) at 57.71 (YTD: 27.09%; 5YR: -45.0%)
Gold ($/ozt) up +1.64 (+0.13%) at 1285.10 (YTD: 0.21%; 5YR: -0.6%)
Copper ($/mt) down -2.00 (-0.03%) at 5926.00 (YTD: -0.65%; 5YR: -14.5%)

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