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8 May 2019

08/05/2019

Market Data and Morning Chat

Morning Chat

Maybe he isn’t bluffing: After making a valiant effort to recover initial losses Monday, US equities took a decided downturn yesterday. By London close, the S&P500 was down 0.84% on broad-based declines and the negative turn dampened European enthusiasm too. The FTSE100 fell 1.63%, DAX -1.58% and CAC -1.60%. By the US close, the S&P500 ended down 1.65%. Although China’s top trade negotiator Vice-Premier Liu He is going to the US, the general chatter was that Donald Trump’s tariff threat had increased the odds of a no-deal, and we all know what chatter about a no-deal outcome does for confidence.


One foot on the brakes: The European Commission cited escalating trade tensions as they cut their growth forecasts for the Euro Area from 1.3% to 1.2% for 2019, noting the forecasts reflected the effects of social discontent, Brexit ambiguity and – importantly – disruptions in the global auto industry. Don’t forget, BMW yesterday announced an 80% fall in profits similarly lamenting the challenging conditions. Indeed, the Commission’s big revision was Germany’s growth prospects crashing from +1.1% to only +0.5% over weaker manufacturing. No wonder German 10-year yields dropped to -0.04% - not far off a 2½-year low – given the growth fears.


That’s not oilfolks: OK, oil didn’t tank, but Brent slipped $1.61 to $69.76 a barrel and West Texas Intermediate slid ¢99 to $61.19 a barrel. The assumption being if growth is lower, energy demand weakens thus triggering lower prices. That’s what hurt the FTSE100 during London trading as Royal Dutch declined 3.9% and BP 2.7%; they accounted for a third of the index’s 120.2 point decline. However, over the pond, the S&P500 energy sector was only down 0.62% – one of the better sectors – as the job openings report pointed to a stronger US economy allowing a late sector recovery.

Despite revenues up 13%, Regeneron shares fell 6.3% over toxicity issues in Phase I drug trials.
Botox-maker Allergan had great results & guidance, but shares fell 4.3% over the new drugs wrinkle
Ferrari races ahead 3.9% with the right formula for profits to beat the highest of estimates

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -16.51 (-1.32%) at 1,239 (YTD: 14.33%; 5YR: 54.2%)
MSCI AC World Equities (USD) down -128.87 (-1.43%) at 8,897 (YTD: 14.48%; 5YR: 43.4%)
Barclays Global Aggregate Bonds up +1.12 (+0.23%) at 489 (YTD: 2.20%; 5YR: 3.5%)

Selected Equity Indices (Capital returns)
S&P 500 down -48.42 (-1.65%) at 2,884 (YTD: 15.05%; 5YR: 53.8%)
NASDAQ down -159.53 (-1.96%) at 7,964 (YTD: 20.02%; 5YR: 96.6%)
Euro STOXX 50 down -61.79 (-1.78%) at 3,401 (YTD: 13.32%; 5YR: 6.1%)
FTSE 100 down -120.17 (-1.63%) at 7,260 (YTD: 7.91%; 5YR: 6.2%)
CAC 40 down -87.77 (-1.60%) at 5,396 (YTD: 14.06%; 5YR: 19.7%)
DAX down -194.14 (-1.58%) at 12,093 (YTD: 14.53%; 5YR: 25.9%)
Nikkei 225 down -321.13 (-1.46%) at 21,603 (YTD: 7.93%; 5YR: 52.5%)
Hang Seng down -282.93 (-0.96%) at 29,080 (YTD: 12.51%; 5YR: 33.2%)
MSCI Emerging Markets down -5.59 (-0.53%) at 1,057 (YTD: 9.45%; 5YR: 4.8%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.46 (began the year at 2.68; 5 years ago it was 2.62)
US 2 Year up +0.00 at 2.29 (began the year at 2.49; 5 years ago it was 0.39)
UK 10 Year down -0.06 at 1.16 (began the year at 1.28; 5 years ago it was 2.64)
Germany 10 Year up +0.00 at -0.04 (began the year at 0.24; 5 years ago it was 1.45)
France 10 Year down 0.00 at 0.33 (began the year at 0.70; 5 years ago it was 1.90)
Italy 10 Year up +0.00 at 2.62 (began the year at 2.74; 5 years ago it was 2.92)
Japan 10 Year unchanged at -0.06 (began the year at -0.01; 5 years ago it was 0.61)
Barclays EM Basket up +0.01 at 6.11 (began the year at 6.22; 5 years ago it was 5.51)

Selected Currencies
$ weakened -0.0034 versus € (-0.30%) at 1.1209 ($: YTD: 2.12%; 5YR: 19.1%)
€ strengthened +0.0026 versus £ (-0.22%) at 1.1659 (€: YTD: -4.54%; 5YR: 4.8%)
$ weakened -0.0011 versus £ (-0.08%) at 1.3069 ($: YTD: -2.53%; 5YR: 22.8%)
¥ strengthened +0.2900 versus $ (+0.26%) at 110.0500 (¥: YTD: 0.35%; 5YR: -7.7%)

Selected Commodities
Brent Crude ($/bbl) up +0.39 (+0.56%) at 70.66 (YTD: 32.89%; 5YR: -34.4%)
WTI Crude ($/bbl) down -0.85 (-1.37%) at 61.40 (YTD: 35.21%; 5YR: -39.1%)
Gold ($/ozt) up +2.89 (+0.23%) at 1287.37 (YTD: 0.38%; 5YR: -0.1%)
Copper ($/mt) down -56.00 (-0.90%) at 6180.00 (YTD: 3.60%; 5YR: -7.1%)

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