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4 November 2018

04/12/2018

Morning Chat & Data

Morning Chat

Oil be seeing you
: Crude oil leapt $1.79 a barrel yesterday, one of the biggest one day moves since early summer when US inventories tumbled.  The rally was triggered by Alberta’s (Canada) decision to trim production by 325,000 barrels a day or nearly 9% and cuts mooted by Russia and Saudi Arabia after their respective oil ministers met in Moscow on the weekend.  While the latter pair haven’t agree amounts yet, reports point to something like 500,000 barrels.  Certainly the news overshadowed Qatar, an early OPEC member, signalling its intention to leave the cartel probably over the fractious geopolitical environment. 

The self-preservation society: Milan led European markets rising 2.26% on indications Brussels did a job on Italy. At the G20, Italian Prime Minister Guiseppe Conte stated Rome and the EU were working to resolve the budget stand-off.  According to Italian officials, the deficit target will fall from 2.4% to 2% and the EU will give some leeway so Rome can avoid the excessive deficit procedure.  The rapid (unusually) response by the EU to levy a 0.5% of GDP fine, coupled with GDP coming in at -0.1% and unemployment surprisingly rising to 10.6%, was more negative news than the Italians needed.

On the rebound: Apple (+3.49%), Nvidia (+4.04%), Micron (+3.81%), Texas Instruments (+1.32%), and Corning (+3.63%) all beat the S&P (+1.09%) yesterday.  They have something else in common, a large proportion of sales going to China.  For example, 57% of Micron’s revenues are generated in China, so it’s no wonder it’s stock is heavily influenced by the tariff outlook.  When President Trump and President Xi agreed to a framework to keep tariffs at bay, it was likely these shares would recover some lost ground –as long as Trump didn’t tweet some reversal.  Their fortunes will improve further on a formal agreement.

Market Data


Selected Global Aggregates (Total returns, unhedged)
 
MSCI AC World Equities (Local) up +14.58 (+1.25%) at 1,182 (YTD: 1.28%; 5YR: 54.3%)
MSCI AC World Equities (USD) up +104.10 (+1.24%) at 8,512 (YTD: 0.54%; 5YR: 45.8%)
Barclays Global Aggregate Bonds up +1.10 (+0.23%) at 471 (YTD: -2.93%; 5YR: 3.7%)
 
Selected Equity Indices
S&P 500 up +30.20 (+1.09%) at 2,790 (YTD: 4.37%; 5YR: 55.6%)
NASDAQ up +110.98 (+1.51%) at 7,442 (YTD: 7.80%; 5YR: 84.3%)
Euro STOXX 50 up +41.86 (+1.32%) at 3,215 (YTD: -8.25%; 5YR: 7.5%)
FTSE 100 up +82.17 (+1.18%) at 7,062 (YTD: -8.13%; 5YR: 8.5%)
CAC 40 up +50.06 (+1.00%) at 5,054 (YTD: -4.87%; 5YR: 21.8%)
DAX up +208.22 (+1.85%) at 11,465 (YTD: -11.24%; 5YR: 25.4%)
Nikkei 225  down -538.71 (-2.39%) at 22,036 (YTD: -3.20%; 5YR: 43.0%)
Hang Seng down -55.31 (-0.20%) at 27,127 (YTD: -9.33%; 5YR: 14.3%)
MSCI Emerging Markets up +22.15 (+2.23%) at 1,017 (YTD: -12.22%; 5YR: 2.1%)
  
Selected Government Bond Yields
US 10 Year down -0.01 at 2.96 (began the year at 2.41; 5 years ago it was 2.83)
US 2 Year up +0.00 at 2.82 (began the year at 1.88; 5 years ago it was 0.29)
UK 10 Year down -0.05 at 1.31 (began the year at 1.19; 5 years ago it was 2.90)
Germany 10 Year down -0.11 at 0.30 (began the year at 0.42; 5 years ago it was 1.81)
France 10 Year down -0.08 at 0.69 (began the year at 0.78; 5 years ago it was 2.40)
Italy 10 Year down -0.40 at 3.14 (began the year at 2.01; 5 years ago it was 4.15)
Japan 10 Year down -0.06 at 0.07 (began the year at 0.04; 5 years ago it was 0.63)
Barclays EM Basket up +0.20 at 6.33 (began the year at 5.49; 5 years ago it was 5.81)
 
Selected Currencies
€/$ down +0.003 (+0.23%) at 1.138 (YTD: -5.35%; 5YR: -16.3%)
£/€ down +0.003 (-0.29%) at 1.119 (YTD: -0.55%; 5YR: -7.7%)
£/$ down -0.001 (-0.09%) at 1.273 (YTD: -5.87%; 5YR: -22.3%)
$/¥ up +0.53 (-0.47%) at 113.10 (YTD: 0.46%; 5YR: 9.7%)

Selected Commodities
Brent Crude ($/bbl) down +0.45 (+0.74%) at 61.54 (YTD: -7.90%; 5YR: -44.9%)
WTI Crude ($/bbl) down +2.02 (+3.97%) at 52.95 (YTD: -12.36%; 5YR: -44.9%)
Gold ($/ozt) up +6.82 (+0.55%) at 1237.47 (YTD: -5.03%; 5YR: -0.5%)
Copper ($/mt) up +97.00 (+1.57%) at 6295.00 (YTD: -13.14%; 5YR: -9.6%)
  
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return
 
SOURCES: BBC; The New York Times; FactSet; Al Jazeera; Financial Times; The Economist; Reuters; CNN; Wall Street Journal; CNBC; Google Finance; Seeking Alpha; The Idea Farm; Bloomberg, Twitter; Wikipedia; Investopedia; The Guardian; The Times of London; Google News; Numerous academic sources and journals; Trade bodies; Government institutions (e.g The Bank of England, The Federal Reserve).

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros