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14 May 2019

14/05/2019

Market Data and Morning Chat

Morning Chat

Heading for the escalators: Yesterday, President Trump reiterated claims that China had reneged on the trade deal by not agreeing to enact promised reform legislation. Chinese state media countered by commenting that the fault lay with the US for imposing increased levies when they said they wouldn’t. Both sides are triggering further tariffs. The US will trigger 25% tariffs on thousands of goods worth $200billion. China, effective from June 1, will hike tariffs ranging from 5% to 25% on about $60billion of goods. The increased tensions knocked the S&P500 2.4% and left shares like Apple, Boeing and Caterpillar needing a lift.

Oil’s didn’t start as a tanker: Last time equities had a big drop, most things followed, including oil. However, news of sabotage to four oil tankers in the Gulf of Oman was enough initially to send oil prices higher – at one point by 2½% – even as equity markets were falling on news of US tariffs against China. It is an indication of the present skittish nature of oil prices. As the minimal extent of damage became known, oil prices did respond to the Chinese tariff retaliation news, leaving both Brent crude and West Texas Intermediate to end the day lower.

Spool me once: Soybeans – one commodity being tossed around in the US-China trade negotiations – made headlines Monday as prices fell $5.75 or 0.72% to $790.80 a bushel. A noticeable drop, yet bigger news is soybeans’ tumble from $900 a bushel a month ago. Consider cotton. According to the National Cotton Council, China imported 13% of US cotton last year and were expected to demand more this year; they’re at 70% of last year’s total already. Yesterday prices fell 4.4% and are down about 1/6thin a month. Seems some commodities saw the thread of trade troubles earlier than other markets.

Chinese April auto sales skidded down 14.6% year-on-year
A bad signal from Vodafone as it cuts dividend €0.06 (approx. from 10% to 6%) dropping share 5.2%
Not everything headed south though, Compass Group, shares were up 1.38% yesterday.
… and President Trump did sound more conciliatory late Monday
… leading today's market futures to turn positive and China’s CSI300 to rise

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -22.15 (-1.80%) at 1,208 (YTD: 11.51%; 5YR: 48.7%)
MSCI AC World Equities (USD) down -164.96 (-1.86%) at 8,702 (YTD: 11.97%; 5YR: 39.4%)
Barclays Global Aggregate Bonds up +0.76 (+0.16%) at 491 (YTD: 2.55%; 5YR: 4.1%)

Selected Equity Indices (Capital returns)
S&P 500 down -69.53 (-2.41%) at 2,812 (YTD: 12.17%; 5YR: 48.9%)
NASDAQ down -269.92 (-3.41%) at 7,647 (YTD: 15.25%; 5YR: 86.5%)
Euro STOXX 50 down -40.27 (-1.20%) at 3,321 (YTD: 10.64%; 5YR: 3.4%)
FTSE 100 down -39.61 (-0.55%) at 7,164 (YTD: 6.47%; 5YR: 4.1%)
CAC 40 down -64.87 (-1.22%) at 5,263 (YTD: 11.24%; 5YR: 16.9%)
DAX down -183.18 (-1.52%) at 11,877 (YTD: 12.48%; 5YR: 21.8%)
Nikkei 225 down -124.05 (-0.59%) at 21,067 (YTD: 5.26%; 5YR: 46.2%)
Hang Seng down -461.42 (-1.62%) at 28,089 (YTD: 8.68%; 5YR: 25.7%)
MSCI Emerging Markets down -16.95 (-1.64%) at 1,016 (YTD: 5.25%; 5YR: -1.5%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.41 (began the year at 2.68; 5 years ago it was 2.54)
US 2 Year down 0.00 at 2.19 (began the year at 2.49; 5 years ago it was 0.37)
UK 10 Year down -0.03 at 1.10 (began the year at 1.28; 5 years ago it was 2.58)
Germany 10 Year up +0.01 at -0.06 (began the year at 0.24; 5 years ago it was 1.37)
France 10 Year up +0.00 at 0.33 (began the year at 0.70; 5 years ago it was 1.81)
Italy 10 Year up +0.01 at 2.71 (began the year at 2.74; 5 years ago it was 2.91)
Japan 10 Year down 0.00 at -0.06 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket down 0.00 at 6.11 (began the year at 6.22; 5 years ago it was 5.49)

Selected Currencies
$ weakened -0.0005 versus € (-0.04%) at 1.1240 ($: YTD: 1.85%; 5YR: 18.0%)
€ strengthened +0.0001 versus £ (-0.01%) at 1.1523 (€: YTD: -3.41%; 5YR: 6.2%)
$ weakened -0.0005 versus £ (-0.04%) at 1.2953 ($: YTD: -1.62%; 5YR: 22.8%)
¥ weakened -0.4300 versus $ (-0.39%) at 109.5700 (¥: YTD: -0.08%; 5YR: -7.1%)

Selected Commodities
Brent Crude ($/bbl) up +0.57 (+0.80%) at 71.59 (YTD: 34.64%; 5YR: -34.7%)
WTI Crude ($/bbl) down -0.62 (-1.01%) at 61.04 (YTD: 34.42%; 5YR: -40.0%)
Gold ($/ozt) down -1.30 (-0.10%) at 1298.61 (YTD: 1.26%; 5YR: -0.6%)
Copper ($/mt) down -115.00 (-1.88%) at 6011.00 (YTD: 0.77%; 5YR: -12.2%)

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