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16 May 2019

16/05/2019

Market Data and Morning Chat

Morning Chat

Cars seem key to the engine: Continental equities initially traded down yesterday yet the DAX closed up +0.86%, with the CAC +0.49% although Italy’s MIB fell 0.22%. Opening weakness came from Germany’s +0.4% Q1 GDP growth; reasonable but driven more by consumer spending and construction than manufacturing. Certainly, German auto production has travelled a rocky road and the numbers didn’t indicate a pick-up yet. Moreover, across the Atlantic, the US retail sales surprise decline (down 0.2% versus +0.2% expected) came in part from soft auto sales. Ouch. Not surprising that the STOXX European600 Autos & Parts index initially declined1.61%.

However, some wheely good news: Even Donald Trump can see the auto sector has been weak. He agreed to delay the imposition of tariffs on US auto & parts imports for up to six months. Otherwise, he was looking at a May 18 deadline for adding tariffs of as much as 25% to autos and in doing so possibly fostering difficult discussions with both the EU and Japan when, with China’ deal unresolved, he really didn’t need another battle. His announcement caused an instant 4.3% leap in the STOXX European 600 Autos & Parts index leaving it to close +1.97%

China’s a bit fragile: Meanwhile, China issued a range of data yesterday morning that all fell short of expectations. Industrial production was only +5.4% not +6.5% year-on-year (YoY), retail sales were +7.2% not +8.6% (YoY) and non-rural fixed asset investment was +6.1% versus the +6.4% expected. The shortfalls combined to foster a belief the government will have to act to stimulate the economy in order to meet long-term growth targets, especially given the possible impact of big US tariffs. Given the CSI 300 index closed up 2.25%, its possible investors saw it as a sign China will agree a deal.

Trump signs order restricting “entity list” from bidding on tech projects on security grounds
CEO Brian Cassin credits global expansion for Experian’s “very good year” as shares rise 1.36%
The 737Max holiday hits TUI, but the reiteration of guidance helps shares fly up 1.79%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +6.60 (+0.54%) at 1,222 (YTD: 12.79%; 5YR: 51.4%)
MSCI AC World Equities (USD) up +50.11 (+0.57%) at 8,805 (YTD: 13.29%; 5YR: 41.9%)
Barclays Global Aggregate Bonds up +0.61 (+0.13%) at 491 (YTD: 2.50%; 5YR: 3.9%)

Selected Equity Indices (Capital returns)
S&P 500 up +16.55 (+0.58%) at 2,851 (YTD: 13.73%; 5YR: 51.8%)
NASDAQ up +87.65 (+1.13%) at 7,822 (YTD: 17.89%; 5YR: 91.2%)
Euro STOXX 50 up +21.40 (+0.64%) at 3,386 (YTD: 12.81%; 5YR: 6.7%)
FTSE 100 up +55.35 (+0.76%) at 7,297 (YTD: 8.45%; 5YR: 6.4%)
CAC 40 up +32.91 (+0.62%) at 5,374 (YTD: 13.60%; 5YR: 20.6%)
DAX up +107.95 (+0.90%) at 12,100 (YTD: 14.59%; 5YR: 25.7%)
Nikkei 225 down -125.58 (-0.59%) at 21,063 (YTD: 5.24%; 5YR: 49.4%)
Hang Seng up +42.31 (+0.15%) at 28,311 (YTD: 9.54%; 5YR: 24.6%)
MSCI Emerging Markets up +1.49 (+0.15%) at 1,016 (YTD: 5.20%; 5YR: -1.5%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.36 (began the year at 2.68; 5 years ago it was 2.52)
US 2 Year down -0.01 at 2.15 (began the year at 2.49; 5 years ago it was 0.36)
UK 10 Year down -0.04 at 1.07 (began the year at 1.28; 5 years ago it was 2.56)
Germany 10 Year down -0.02 at -0.11 (began the year at 0.24; 5 years ago it was 1.33)
France 10 Year down -0.01 at 0.29 (began the year at 0.70; 5 years ago it was 1.78)
Italy 10 Year up +0.01 at 2.76 (began the year at 2.74; 5 years ago it was 3.06)
Japan 10 Year up +0.00 at -0.06 (began the year at -0.01; 5 years ago it was 0.58)
Barclays EM Basket down -0.02 at 6.11 (began the year at 6.22; 5 years ago it was 5.50)

Selected Currencies
$ weakened -0.0002 versus € (-0.02%) at 1.1208 ($: YTD: 2.13%; 5YR: 18.2%)
€ strengthened +0.0020 versus £ (-0.17%) at 1.1458 (€: YTD: -2.86%; 5YR: 7.2%)
$ strengthened +0.0021 versus £ (+0.16%) at 1.2843 ($: YTD: -0.76%; 5YR: 23.7%)
¥ weakened -0.0300 versus $ (-0.03%) at 109.4700 (¥: YTD: -0.17%; 5YR: -7.3%)

Selected Commodities
Brent Crude ($/bbl) up +0.17 (+0.23%) at 73.08 (YTD: 37.45%; 5YR: -33.7%)
WTI Crude ($/bbl) up +0.24 (+0.39%) at 62.02 (YTD: 36.58%; 5YR: -38.9%)
Gold ($/ozt) up +0.70 (+0.05%) at 1297.22 (YTD: 1.15%; 5YR: 0.3%)
Copper ($/mt) up +58.00 (+0.96%) at 6085.00 (YTD: 2.01%; 5YR: -11.6%)

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