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7 May 2019

07/05/2019

Market Data and Morning Chat

Morning Chat

Yay, a short week: Yesterday’s bank holiday means a short business week for us, but the Europeans were hard at work seeing their markets slip over US-China trade concerns, a slight miss on the Markit Composite PMI and retail sales only +1.9%, not the +3.0% expected. In the week ahead, we’ll hopefully get more news on the trade talks, but also US consumer inflation, which hasn’t really been a worry, and jobs openings data which was a worry last month. Here in the UK, Friday’s a big day with GDP data (0.5% expected), industrial & manufacturing production and trade data.

…though Trump’s been busy already: Friday’s April US non-farm payrolls data was a very strong 263,000, 74,000 more than March and well ahead of forecasts. There were strong gains in professional and business services, construction and health care, with only retail seeing any declines. Moreover, hourly earnings were up 3.2%. All good news lifting the S&P500 up 0.95% to 2,945.30. Pity then that US President Donald Trump threatened pushing the current 10% tariffs on Chinese goods to 25% by Friday and to broaden the goods covered from $200billion to $525bilion shortly. The S&P500 dropped 0.45% on Monday on the news.


…only 0.45%? When the US opened the S&P500 instantly slipped 1.26% to 2,908.89. Given US-China trade talks have been the principal driver of sentiment for more than six months, Donald Trump’s negative tone was bound to trigger a fall. Yet, as Monday progressed, markets clawed back losses with the S&P500 recovering a further 1% after Europe closed. Gains came on news the Chinese delegation was still going to travel to the US this week and a belief Donald Trump was only posturing, which fits with US Chief of Staff Mulvaney’s and Treasury Secretary Mnuchin’s more positive comments last week.


BMW profits were driven down 80% on slow sales and a £1.2billion provision, knocking shares 1%
Pioneer Natural Resources capped capital spending pumping earnings, but Eagleford sale difficult
AB Inbev sales up 5.9%, volumes up 1.3%, but earnings-per-shares slight miss left shares flat
Tyson Foods bringing home the bacon with above expectation sales guidance lifting shares 2.6%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -7.92 (-0.63%) at 1,255 (YTD: 15.85%; 5YR: 56.6%)
MSCI AC World Equities (USD) down -43.83 (-0.48%) at 9,026 (YTD: 16.14%; 5YR: 45.8%)
Barclays Global Aggregate Bonds up +0.56 (+0.11%) at 488 (YTD: 1.97%; 5YR: 3.3%)

Selected Equity Indices (Capital returns)
S&P 500 down -13.17 (-0.45%) at 2,932 (YTD: 16.98%; 5YR: 56.1%)
NASDAQ down -40.71 (-0.50%) at 8,123 (YTD: 22.43%; 5YR: 99.7%)
Euro STOXX 50 down -39.53 (-1.13%) at 3,463 (YTD: 15.38%; 5YR: 9.6%)
FTSE 100 up +29.33 (+0.40%) at 7,381 (YTD: 9.70%; 5YR: 8.6%)
CAC 40 down -65.32 (-1.18%) at 5,484 (YTD: 15.91%; 5YR: 23.3%)
DAX down -125.87 (-1.01%) at 12,287 (YTD: 16.36%; 5YR: 29.0%)
Nikkei 225 down -335.01 (-1.51%) at 21,924 (YTD: 9.54%; 5YR: 53.4%)
Hang Seng down -26.68 (-0.09%) at 29,183 (YTD: 12.91%; 5YR: 34.2%)
MSCI Emerging Markets down -20.13 (-1.86%) at 1,063 (YTD: 10.03%; 5YR: 5.8%)

Selected Government Bond Yields
US 10 Year up +0.02 at 2.49 (began the year at 2.68; 5 years ago it was 2.59)
US 2 Year up +0.01 at 2.30 (began the year at 2.49; 5 years ago it was 0.40)
UK 10 Year unchanged at 1.22 (began the year at 1.28; 5 years ago it was 2.66)
Germany 10 Year up +0.01 at 0.02 (began the year at 0.24; 5 years ago it was 1.47)
France 10 Year up +0.01 at 0.37 (began the year at 0.70; 5 years ago it was 1.94)
Italy 10 Year down 0.00 at 2.58 (began the year at 2.74; 5 years ago it was 3.01)
Japan 10 Year down -0.01 at -0.05 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket down -0.01 at 6.10 (began the year at 6.22; 5 years ago it was 5.56)

Selected Currencies
$ weakened -0.0010 versus € (-0.09%) at 1.1213 ($: YTD: 2.09%; 5YR: 19.4%)
€ weakened -0.0011 versus £ (+0.09%) at 1.1703 (€: YTD: -4.90%; 5YR: 4.1%)
$ weakened -0.0024 versus £ (-0.18%) at 1.3122 ($: YTD: -2.95%; 5YR: 22.7%)
¥ strengthened +0.0500 versus $ (+0.05%) at 110.7600 (¥: YTD: 0.99%; 5YR: -8.2%)

Selected Commodities
Brent Crude ($/bbl) up +0.28 (+0.39%) at 71.53 (YTD: 34.53%; 5YR: -33.7%)
WTI Crude ($/bbl) up +0.31 (+0.50%) at 62.25 (YTD: 37.08%; 5YR: -37.4%)
Gold ($/ozt) up +1.38 (+0.11%) at 1282.48 (YTD: 0.00%; 5YR: -0.6%)
Copper ($/mt) up +69.00 (+1.12%) at 6236.00 (YTD: 4.54%; 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