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13 November 2019

13/11/2019

Market Data and Morning Chat

Morning Chat 

Maybe they’re in Uni: The UK Office of National Statistics November labour market commentary issued yesterday showed good annual progress with employment up 0.5%, unemployment down 0.2% to 3.8% and the economically inactive – those not actively seeking employment – down 0.3% (yep, all adds up).  Over the last quarter though, while unemployment fell 0.1%, employment also shrank, declining by 58,000 (mainly women). Meanwhile, the economically inactive increased 53,000 – again primarily women; oh, and it was the 18-24 cohort of the economically inactive that increased. Implicitly, a cohort of young women left employment and are not seeking work. Sounds like they’re studying.

Quiet before the Trump-storm: There wasn’t much else to drive the markets early Tuesday. The US traded on thin volumes Monday because of Veterans’ Day. The main data was the mixed UK employment data, good long-term, weak lately & with slightly-below-expectations wage growth and the improved German economic sentiment.  There was however US President Donald Trump’s speech at the Economic Club in New York.  Europe traded up in anticipation. Disappointingly though he made little mention of the news everyone is waiting for – the agreement over a phase one deal – but rather offered again a more belligerent tone, denting investor sentiment.

Not just China: Trump’s tough tone went beyond berating China (though he did claim a trade deal was close).  He also railed against the EU for their unfair trade practices – claiming they’re “in many ways worse than China” – and fired a heavy salvo against the Fed.  No wonder he didn’t move the tariff goalposts against Europe – though today is the deadline to do so. With the Fed, he claimed equity markets could be as much as 25% higher if the Fed had more aggressively cut rates.  True or not, his speech softened US market gains. Might not be all Fed. 
 
Trump’s speech has also sent today’s equity futures into the red by ¼ to ½%
Meggitt (-0.7%) injected some margin caution over the 737Max grounding into their guidance
Mr. Kipling makes good profits for Premier Foods (+9.0%), icing on the cake of their review
Despite in-line earnings, DCC’s (-6.2%) tech unit didn’t grease numbers as hoped on weak UK
Nissan (-0.5%) profits crash by 70% as vehicle sales swerve 5% off expectations  
Abbvie (+0.9%) launched the fourth largest bond issue ever to finance their Allergan deal

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +3.03 (+0.23%) at 1,327 (YTD: 22.51%; 5YR: 54.2%)
MSCI AC World Equities (USD) up +16.15 (+0.17%) at 9,580 (YTD: 23.26%; 5YR: 49.9%)
Barclays Global Aggregate Bonds down -0.20 (-0.04%) at 505 (YTD: 5.51%; 5YR: 10.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +4.83 (+0.16%) at 3,092 (YTD: 23.34%; 5YR: 51.6%)    
NASDAQ up +21.82 (+0.26%) at 8,486 (YTD: 27.89%; 5YR: 81.3%)    
Euro STOXX 50 up +15.38 (+0.42%) at 3,712 (YTD: 23.68%; 5YR: 21.4%)    
FTSE 100 up +36.90 (+0.50%) at 7,365 (YTD: 9.47%; 5YR: 11.0%)    
CAC up +25.93 (+0.44%) at 5,920 (YTD: 25.14%; 5YR: 41.4%)    
DAX up +85.14 (+0.65%) at 13,284 (YTD: 25.80%; 5YR: 43.6%)    
Nikkei 225  down -200.14 (-0.85%) at 23,320 (YTD: 16.51%; 5YR: 34.1%)    
Hang Seng down -553.07 (-2.04%) at 26,512 (YTD: 2.58%; 5YR: 10.4%)    
MSCI Emerging Markets up +2.95 (+0.28%) at 1,056 (YTD: 9.32%; 5YR: 6.4%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.66 (began the year at 2.49; 5 years ago it was 0.52)    
US 10 Year down -0.02 at 1.92 (began the year at 2.68; 5 years ago it was 2.34)    
UK 10 Year down -0.01 at 0.81 (began the year at 1.28; 5 years ago it was 2.18)    
Germany 10 Year down -0.01 at -0.26 (began the year at 0.24; 5 years ago it was 0.80)    
France 10 Year down 0.00 at 0.04 (began the year at 0.70; 5 years ago it was 1.16)    
Italy 10 Year up +0.01 at 1.23 (began the year at 2.74; 5 years ago it was 2.37)    
Japan 10 Year down -0.02 at -0.05 (began the year at -0.01; 5 years ago it was 0.50)    
Barclays EM Basket up +0.01 at 5.48 (began the year at 6.22; 5 years ago it was 5.15)
    
Selected Currencies    
$ strengthened +0.0002 versus € (+0.02%) at 1.1009 ($: YTD: 3.87%; 5YR: 11.7%)    
€ strengthened +0.0003 versus £ (-0.03%) at 1.1674 (€: YTD: -4.66%; 5YR: 8.0%)    
$ strengthened +0.0003 versus £ (+0.02%) at 1.2855 ($: YTD: -0.86%; 5YR: 18.2%)    
¥ strengthened +0.0200 versus $ (+0.02%) at 109.0700 (¥: YTD: -0.54%; 5YR: 6.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.24 (-0.38%) at 62.36 (YTD: 17.28%; 5YR: -18.2%)    
WTI Crude ($/bbl) down -0.06 (-0.11%) at 56.80 (YTD: 25.08%; 5YR: -26.4%)    
Gold ($/ozt) up +4.95 (+0.34%) at 1461.30 (YTD: 13.95%; 5YR: 25.7%)    
Copper ($/mt) down -9.50 (-0.16%) at 5869.00 (YTD: -1.61%; 5YR: -12.1%)    
    
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