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8 November 2019

08/11/2019

Market Data and Morning Chat

Morning Chat 

Yielding ground: The Media got all excited yesterday as Gao Feng of China’s Commerce Ministry announced that the US and China had agreed to simultaneously cancel tariffs against each other. Let’s hope someone told Donald.  However, the news did heighten expectations of the “Phase One” deal and soften the view of the pessimists in the global bond market.  The US 10-year yield had the biggest 1-day jump since Trump was elected, the UK 10-year leapt to a 4-month high, the Canadian a 6-month high and there was similar news elsewhere. Settling the trade dispute really would cure the sentiment bugbear. 

Magic & monster: Global equities also gained on the trade news with all the major indices up.  Moreover, a fall in the pound triggered by the lack of unanimity within the Bank of England’s rate-setting Monetary Policy Committee further enhanced non-sterling gains for UK investors.  But it wasn’t just a trade deal moving the dial; earnings continue to be notably better-than-expected. For instance, amidst bigger names reporting yesterday, Disney (+5.3% aftermarket) beat on earnings and revenue even with Hong Kong protests dampening returns at the local China Disneyland. Meanwhile, Monster Beverage (2.4%) was also drinking up improved sales and revenues.

…And a White Knight: The US political scene is focussed on the Democrats’ efforts to impeach Donald Trump. The Senate is busy trying to agree trial rules despite Republican Senate leader Mitch McConnell already declaring the Senate will acquit.  Nothing like a fair trial! Public support for the impeachment process has faded slightly too, and some wonder if Joe Biden will end up caught in the cross-fire. With Kamala Harris fortunes declining, and Bernie Saunders failing to gain traction, left-winger Elizabeth Warren probably favoured her chances, but Michael Bloomberg may soon gallop in for his turn in the Democrats’ tilt-yard.

All the market good news dulled gold as it had its worst week in two years falling 2.6%
… but futures in the red today as the rally awaits more compelling trade news
Speaking of trading on Bonds, Aston Martin profits stall but shares still rallied 1.8% 
Sainsbury’s (-0.1%) found profits were eaten up by store closure costs and unfavourable weather
Halfords (+2.3%) shares raced up despite lower profits as costs were kept wheel-y under control
Expedia (-27.4%) & TripAdvisor (-22.4%) see profits fall as online bookings lose direction
Ralph Lauren (+14.7%) sees good looking sales in Asia despite Hong Kong troubles 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +4.96 (+0.38%) at 1,327 (YTD: 22.45%; 5YR: 55.0%)
MSCI AC World Equities (USD) up +25.73 (+0.27%) at 9,563 (YTD: 23.05%; 5YR: 50.5%)
Barclays Global Aggregate Bonds up +0.48 (+0.09%) at 509 (YTD: 6.20%; 5YR: 11.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +8.40 (+0.27%) at 3,085 (YTD: 23.07%; 5YR: 51.8%)    
NASDAQ up +23.89 (+0.28%) at 8,435 (YTD: 27.12%; 5YR: 82.1%)    
Euro STOXX 50 up +17.94 (+0.49%) at 3,707 (YTD: 23.50%; 5YR: 20.9%)    
FTSE 100 up +9.76 (+0.13%) at 7,406 (YTD: 10.08%; 5YR: 12.8%)    
CAC up +24.25 (+0.41%) at 5,891 (YTD: 24.53%; 5YR: 40.6%)    
DAX up +109.57 (+0.83%) at 13,289 (YTD: 25.86%; 5YR: 43.0%)    
Nikkei 225  up +61.55 (+0.26%) at 23,392 (YTD: 16.87%; 5YR: 38.6%)    
Hang Seng down -261.35 (-0.94%) at 27,586 (YTD: 6.73%; 5YR: 17.1%)    
MSCI Emerging Markets up +4.71 (+0.44%) at 1,074 (YTD: 11.16%; 5YR: 8.7%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.66 (began the year at 2.49; 5 years ago it was 0.50)    
US 10 Year down -0.02 at 1.90 (began the year at 2.68; 5 years ago it was 2.30)    
UK 10 Year up +0.08 at 0.79 (began the year at 1.28; 5 years ago it was 2.20)    
Germany 10 Year down -0.01 at -0.25 (began the year at 0.24; 5 years ago it was 0.82)    
France 10 Year down -0.02 at 0.03 (began the year at 0.70; 5 years ago it was 1.18)    
Italy 10 Year down -0.17 at 0.99 (began the year at 2.74; 5 years ago it was 2.37)    
Japan 10 Year down -0.11 at -0.19 (began the year at -0.01; 5 years ago it was 0.48)    
Barclays EM Basket up +0.01 at 5.46 (began the year at 6.22; 5 years ago it was 5.19)
    
Selected Currencies    
$ weakened -0.0011 versus € (-0.10%) at 1.1052 ($: YTD: 3.49%; 5YR: 11.1%)    
€ strengthened +0.0016 versus £ (-0.14%) at 1.1592 (€: YTD: -3.99%; 5YR: 10.0%)    
$ strengthened +0.0003 versus £ (+0.02%) at 1.2812 ($: YTD: -0.52%; 5YR: 19.2%)    
¥ strengthened +0.2000 versus $ (+0.18%) at 109.2700 (¥: YTD: -0.36%; 5YR: 5.0%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.49 (-0.78%) at 62.21 (YTD: 17.00%; 5YR: -24.5%)    
WTI Crude ($/bbl) up +0.80 (+1.42%) at 57.15 (YTD: 25.85%; 5YR: -27.3%)    
Gold ($/ozt) up +2.30 (+0.16%) at 1470.80 (YTD: 14.69%; 5YR: 24.9%)    
Copper ($/mt) up +67.00 (+1.13%) at 5974.00 (YTD: 0.15%; 5YR: -11.0%)    
    
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