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10 May 2019

10/05/2019

Market Data and Morning Chat

Morning Chat

The US announced the imposition of further tariffs on Chinese goods this morning


Trading on the pessimistic view: Let’s face it, with Trump saying China had broken the trade deal, sentiment was going to be poor with a deadline of 5am GMT today for $325billion more in tariffs to come into effect. Yesterday kicked off with Asian markets falling. European equities joined in. By the close the FTSE100 was down 0.87%, the DAX 1.69%, CAC down 1.93% and Italy’s MIB fell 1.82%; European auto stocks – heavily influenced by China trade – were decidedly hit with the EUROStoxx600 Autos index down 2.86%. Yet today – with tariffs a fact – Asian trading and European futures are up!


No wonder Trump’s approval rating rallied: Despite the US-China tariff war, his tough talk is appealing to supporters even if they are in the firing line. His approval rating is now 42.4% - higher than Reagan, Ford and Carter at this point in their tenure. But there’s more. Last Friday saw great US labour numbers – non-farm payrolls of 236,000 versus 188,000 expected, unemployment down to 3.6% & productivity up 3.6%. Since then we’ve seen factory orders up 1.9%, durables up 2.6% and a big rebound in the job openings report. Yup, US data has definitely been robust despite the tariffs.

Copper load of this: The National Grid Electricity System Operator announced Britain had its first coal-free power generation week since 1882 (when the first coal-fired plant came online) as natural gas and renewables filled the need. Now, if we did switch wholeheartedly to electric vehicles we would use something like 29Terawatts more of electricity – about 9% of total UK electricity generation (based on average costs and MOT-reported average mileages per car per annum). It would also put up our mined copper demand by about 4-5% as electric cars use three times as much as a petrol car. Not extreme numbers.

Symantec was not so safe yesterday falling 13% on the resignation of CEO Greg Clark
Chevron rallies 3.1% as they walk away from the Anadarko bid
BA parent IAG shares fly lower 2.3% as earnings fell 60% overQ1

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -9.22 (-0.75%) at 1,226 (YTD: 13.20%; 5YR: 52.6%)
MSCI AC World Equities (USD) down -47.67 (-0.54%) at 8,835 (YTD: 13.68%; 5YR: 42.7%)
Barclays Global Aggregate Bonds up +0.66 (+0.13%) at 490 (YTD: 2.33%; 5YR: 4.1%)

Selected Equity Indices (Capital returns)
S&P 500 down -8.70 (-0.30%) at 2,871 (YTD: 14.52%; 5YR: 52.8%)
NASDAQ down -32.73 (-0.41%) at 7,911 (YTD: 19.22%; 5YR: 94.3%)
Euro STOXX 50 down -66.55 (-1.95%) at 3,351 (YTD: 11.64%; 5YR: 5.2%)
FTSE 100 down -63.59 (-0.87%) at 7,207 (YTD: 7.12%; 5YR: 5.8%)
CAC 40 down -104.43 (-1.93%) at 5,313 (YTD: 12.31%; 5YR: 18.7%)
DAX down -206.01 (-1.69%) at 11,974 (YTD: 13.40%; 5YR: 25.0%)
Nikkei 225 down -200.46 (-0.93%) at 21,402 (YTD: 6.93%; 5YR: 50.7%)
Hang Seng down -692.13 (-2.39%) at 28,311 (YTD: 9.54%; 5YR: 29.5%)
MSCI Emerging Markets down -22.54 (-2.14%) at 1,028 (YTD: 6.48%; 5YR: 2.1%)

Selected Government Bond Yields
US 10 Year down -0.04 at 2.45 (began the year at 2.69; 5 years ago it was 2.62)
US 2 Year down -0.04 at 2.26 (began the year at 2.50; 5 years ago it was 0.38)
UK 10 Year down -0.03 at 1.10 (began the year at 1.27; 5 years ago it was 2.68)
Germany 10 Year down -0.01 at -0.06 (began the year at 0.24; 5 years ago it was 1.46)
France 10 Year up +0.01 at 0.33 (began the year at 0.71; 5 years ago it was 1.90)
Italy 10 Year up +0.04 at 2.66 (began the year at 2.75; 5 years ago it was 2.96)
Japan 10 Year up +0.00 at -0.06 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket up +0.01 at 5.26 (began the year at 5.98; 5 years ago it was 4.89)

Selected Currencies
$ weakened +0.0028 versus € (+0.25%) at 1.1230 ($: YTD: -1.77%; 5YR: -18.4%)
€ strengthened -0.0009 versus £ (-0.08%) at 1.1594 (€: YTD: 4.07%; 5YR: -5.3%)
$ weakened +0.0022 versus £ (+0.17%) at 1.3020 ($: YTD: 2.23%; 5YR: -22.7%)
¥ strengthened -0.6100 versus $ (-0.55%) at 109.5650 (¥: YTD: -0.14%; 5YR: 7.7%)

Selected Commodities
Brent Crude ($/bbl) down -0.01 (-0.01%) at 70.37 (YTD: 39.15%; 5YR: -34.7%)
WTI Crude ($/bbl) down -0.44 (-0.71%) at 61.70 (YTD: 36.66%; 5YR: -38.3%)
Gold ($/ozt) up +0.90 (+0.07%) at 1286.10 (YTD: 0.56%; 5YR: -0.4%)
Copper ($/mt) up +9.00 (+0.15%) at 6112.00 (YTD: 2.46%; 5YR: -9.7%)

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