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1 May 2019

01/05/2019

Morning Chat and Market Data

Morning Chat

April pays off for equity investors: Although posting a weak last day, European markets aren’t calling mayday. Over the month the FTSE100 was up 1.91%, Germany’s DAX up a massive 7.10% - the best of the major markets – France’s CAC up 4.41% and Italy’s MIB up 3.57%. The upbeat numbers mainly came on the US-China trade optimism, good corporate results and confidence numbers earlier in the month. Better still, the GDP data just announced has Euro-zone GDP up 0.4% - ahead of consensus – on improved industrial production (up 1.8% in the quarter) and Italy is out of recession growing 0.2%.

European Bank till a bit cashless: The EuroSTOXX Banks index saw choppy trading yesterday an while rallying ultimately closed down 0.35%. Danske Bank, the beleaguered Danish bank at the center of the Estonian money-laundering scandal slipped nearly 10% as higher funding costs took a toll. Meanwhile Nordea (-4.2%) and a trio of Spanish banks reported disappointing earnings; Santander, down 0.2%, fell on weak European revenues, BBVA recovered to +0.1% though their Turkish business was roasted and Caixa (-2.7%) suffered from declining fees revenue. President Trump sued Deutsche Bank. Standard Chartered offered a silver lining – their first buy-back in 20 years.

Very a-peeling news: OK, if I tell you revenue is lower by 5% over the year and diluted earnings-per-share (eps) are down 10%, you’re going to expect the shares to be down, right? Wrong-o. Apple did just that, with revenues of $58billion and eps of $2.46, but those numbers were head of expectations. Moreover, 61% of revenues came from non-US. Plus, dividends are up 5% and guidance for next quarter was a big slice better than analysts were forecasting thanks to improvements in China. A-ha I hear you say – and those shares? Up 4.9% in aftermarket trading, what a pip.

Reiwa period begins in Japan as Emperor Naruhito’s reign begins.
2018 market darling Advanced Micro Devices was up 3.0% on its earnings beat.
Amgen fell slightly as Neulasta sales slipped 12%
Modelez shares leapt about; still up 1.7% though on ok earnings – that’s the way the Oreo crumbles
Alphabet (google) shares had their worst day since 2008 on their disappointing earnings Monday.
GE was on a bit of a charge up 4%, while McDonald’s flipped up 0.2% on earnings

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -0.03 (0.00%) at 1,263 (YTD: 16.56%; 5YR: 57.0%)
MSCI AC World Equities (USD) up +13.86 (+0.15%) at 9,070 (YTD: 16.70%; 5YR: 46.1%)
Barclays Global Aggregate Bonds up +1.22 (+0.25%) at 488 (YTD: 1.90%; 5YR: 3.7%)

Selected Equity Indices (Capital returns)
S&P 500 up +2.80 (+0.10%) at 2,946 (YTD: 17.51%; 5YR: 56.4%)
NASDAQ down -66.47 (-0.81%) at 8,095 (YTD: 22.01%; 5YR: 96.1%)
Euro STOXX 50 up +12.68 (+0.36%) at 3,515 (YTD: 17.10%; 5YR: 9.9%)
FTSE 100 down -22.44 (-0.30%) at 7,418 (YTD: 10.26%; 5YR: 8.9%)
CAC 40 up +5.43 (+0.10%) at 5,586 (YTD: 18.09%; 5YR: 24.5%)
DAX up +16.06 (+0.13%) at 12,344 (YTD: 16.91%; 5YR: 28.5%)
Nikkei 225 down -48.85 (-0.22%) at 22,259 (YTD: 11.21%; 5YR: 55.8%)
Hang Seng down -193.70 (-0.65%) at 29,699 (YTD: 14.91%; 5YR: 34.2%)
MSCI Emerging Markets down -3.67 (-0.34%) at 1,079 (YTD: 11.75%; 5YR: 8.4%)

Selected Government Bond Yields
US 10 Year up +0.00 at 2.50 (began the year at 2.68; 5 years ago it was 2.61)
US 2 Year down 0.00 at 2.26 (began the year at 2.49; 5 years ago it was 0.41)
UK 10 Year up +0.03 at 1.19 (began the year at 1.28; 5 years ago it was 2.64)
Germany 10 Year up +0.01 at 0.01 (began the year at 0.24; 5 years ago it was 1.47)
France 10 Year up +0.00 at 0.37 (began the year at 0.70; 5 years ago it was 1.95)
Italy 10 Year down -0.03 at 2.55 (began the year at 2.74; 5 years ago it was 3.06)
Japan 10 Year down -0.01 at -0.05 (began the year at -0.01; 5 years ago it was 0.62)
Barclays EM Basket up +0.02 at 6.04 (began the year at 6.22; 5 years ago it was 5.65)

Selected Currencies
$ strengthened +0.0003 versus € (+0.03%) at 1.1214 ($: YTD: 2.08%; 5YR: 19.1%)
€ strengthened +0.0001 versus £ (-0.01%) at 1.1627 (€: YTD: -4.27%; 5YR: 4.8%)
$ strengthened +0.0004 versus £ (+0.03%) at 1.3038 ($: YTD: -2.29%; 5YR: 22.8%)
¥ weakened -0.2100 versus $ (-0.19%) at 111.5300 (¥: YTD: 1.68%; 5YR: -8.3%)

Selected Commodities
Brent Crude ($/bbl) down -0.16 (-0.22%) at 71.69 (YTD: 34.83%; 5YR: -33.3%)
WTI Crude ($/bbl) up +0.41 (+0.65%) at 63.91 (YTD: 40.74%; 5YR: -35.9%)
Gold ($/ozt) down -4.58 (-0.36%) at 1278.97 (YTD: -0.27%; 5YR: -0.4%)
Copper ($/mt) up +19.00 (+0.30%) at 6415.00 (YTD: 7.54%; 5YR: -3.4%)

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