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25 October 2018

25/10/2018

Morning Chat & Market Data

Morning Chat

Correct me if I'm wrong: The Nasdaq Composite led US indices down yesterday sliding 4.4%. The S&P fell 3.1% and the Dow 2.4% to round out the worst day for US stocks for 7 years and easily pushing the markets into a technical correction.  The bad news started with the earnings miss by Texas Instruments, and plagued tech stocks. Given Apple, Microsoft, Netflix, Amazon and Alphabet account for over 25% of the Nasdaq&';s market capitalisation were all down significantly, Netflix alone by 9.4%, it was going to be messy.  Hopefully Amazon & Alphabet, who report today, will rally a cheer.

No pressure then: Both Brent, now $75.53, & West Texas Intermediate at $66.77 rebounded a bit yesterday, yet remain down about 13% from the early month high.  Consequently, the MSCI Global Energy sector stocks are off more than 13% in sterling terms over the same period too.  The big declines come on a large increase in US crude inventories, and a pledge by Saudi Arabia to produce as much as they can to cover the Iran sanctions shortfall and lift concerns over supply pressures – a pledge that should please Donald Trump and also neatly distract from the Khashoggi murder case.

Rome on 2.4% a year: The big market declines along with the suspicious packages sent to the Obamas and Clintons is headline news, but the EU sent Rome's suspicious package back to them yesterday, passing a “negative opinion” on the budget and giving the Italians three weeks to revise it. The Milan index fell 1.7% on the news, easily making it the worst performing European bourse as it dropped back to the levels of February 2017. Deputy Prime Minister Luis Di Maio was defiant, stating “it's the first budget that is written in Rome and not in Brussels”

Dear Readers, for over five years, Fahad Kamal has been producing the Morning Chat on a near daily basis. Today I take over the daily KH missive until the end of the year as Fahad focuses on new responsibilities. ... T 0 and counting!

Market Data

Selected Global Aggregates (Total returns, unhedged)
 
MSCI AC World Equities (Local) down -22.80 (-1.98%) at 1,131 (YTD: -3.08%; 5YR: 49.0%)
MSCI AC World Equities (USD) down -185.71 (-2.22%) at 8,171 (YTD: -3.49%; 5YR: 40.1%)
Barclays Global Aggregate Bonds down -0.39 (-0.08%) at 469 (YTD: -3.14%; 5YR: 1.5%)

Selected Equity Indices

S&P 500 down -84.59 (-3.09%) at 2,656 (YTD: -0.65%; 5YR: 50.9%)
NASDAQ down -329.14 (-4.43%) at 7,108 (YTD: 2.97%; 5YR: 80.3%)
Euro STOXX 50 down -10.61 (-0.34%) at 3,130 (YTD: -10.66%; 5YR: 3.2%)
FTSE 100 up +7.77 (+0.11%) at 6,963 (YTD: -9.43%; 5YR: 3.6%)
CAC 40 down -14.60 (-0.29%) at 4,953 (YTD: -6.77%; 5YR: 15.9%)
DAX down -82.65 (-0.73%) at 11,192 (YTD: -13.36%; 5YR: 24.5%)
Nikkei 225  down -822.45 (-3.72%) at 21,269 (YTD: -6.57%; 5YR: 51.0%)
Hang Seng down -449.65 (-1.78%) at 24,800 (YTD: -17.11%; 5YR: 9.3%)
MSCI Emerging Markets down -7.49 (-0.78%) at 953 (YTD: -17.73%; 5YR: -7.2%)

Selected Government Bond Yields

US 10 Year up +0.00 at 3.11 (began the year at 2.41; 5 years ago it was 2.51)
US 2 Year unchanged at 2.83 (began the year at 1.88; 5 years ago it was 0.30)
UK 10 Year down -0.01 at 1.46 (began the year at 1.19; 5 years ago it was 2.61)
Germany 10 Year down -0.02 at 0.38 (began the year at 0.42; 5 years ago it was 1.76)
France 10 Year down -0.02 at 0.76 (began the year at 0.78; 5 years ago it was 2.25)
Italy 10 Year up +0.04 at 3.58 (began the year at 2.01; 5 years ago it was 4.22)
Japan 10 Year down -0.02 at 0.11 (began the year at 0.04; 5 years ago it was 0.61)
Barclays EM Basket up +0.03 at 6.11 (began the year at 5.49; 5 years ago it was 5.39)

Selected Currencies

€/$ down +0.002 (+0.18%) at 1.141 (YTD: -5.06%; 5YR: -17.3%)
£/€ up 0.000 (+0.02%) at 1.131 (YTD: 0.53%; 5YR: -3.6%)
£/$ down +0.003 (+0.20%) at 1.291 (YTD: -4.54%; 5YR: -20.1%)
$/¥ down +0.45 (-0.40%) at 112.11 (YTD: -0.42%; 5YR: 13.1%)

Selected Commodities

Brent Crude ($/bbl) down +0.02 (+0.03%) at 75.53 (YTD: 13.04%; 5YR: -29.6%)
WTI Crude ($/bbl) up +0.44 (+0.66%) at 66.77 (YTD: 10.51%; 5YR: -31.0%)
Gold ($/ozt) up +4.00 (+0.32%) at 1237.75 (YTD: -5.01%; 5YR: -8.4%)
Copper ($/mt) down -17.00 (-0.27%) at 6179.00 (YTD: -14.74%; 5YR: -13.9%)
 
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