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15 October 2019

15/10/2019

Market Data and Morning Chat

Morning Chat 

Bridling enthusiasm: Sterling slipped and equity markets gave ground yesterday as the euphoria over the Brexit negotiations and US-China trade talks was dialled back a bit.  After a weekend of negotiations between the UK and Europe only resulted in Michel Barnier’s comment that ”a lot of work remains” rather than deliver a break-though it was likely European markets would slide.  Meanwhile, US markets closed lower amid reports that China wanted to have further talks before signing a “substantial phase one deal”, though there had been “substantial progress”.  Seems like there’s still some horse-trading to do before markets trot along again.

Her Majesty has spoken: Parliament witnessed the Queen’s speech as she delivered the government’s agenda opening with Brexit and the desire for a deal plus new regimes for fisheries, agriculture & trade. There were measures supporting the NHS, adult care reform and to address violent crime with tougher sentencing and better recognition & support for victims.  Importantly for savers, there’s new laws to provide better oversight and protection of pensions.  Then there was backing for the regions, tech funding, an open visa system and legislation courting the green voter. Now all Boris needs is a workable majority. General election anyone?

Ladies and gentlemen, start your engines: The US earnings season looks to the big banks this week, but already twenty-three companies have seen fit to report.  Twenty-one raced ahead of profit estimates – pretty good for the first lap.  Moreover, more than half topped revenue estimates too.  Time will tell if the aggregate seasonal numbers come in at the -4.6% year-on-year decline expected – driven down by a significant slowing in energy, tech and material company earnings (Hey, slowing growth and China tariffs tend to affect those sectors). However, that’s in the rear-view mirror, and guidance of the road ahead that’s key.

… and market futures are revved up today, signalling gains pretty much across the board
Gold’s lustre has held with the metal holding an average $1500 for coming up to 2½ months
Increased machinery investment helped oil the 0.3% rise in Eurozone industrial production
Funny, the most vocal objectors to the Catalan separatists’ harsh sentences were the SNP 
Administrator Link announced the Woodford Equity Income fund is to be wound up 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -0.72 (-0.06%) at 1,273 (YTD: 17.46%; 5YR: 60.3%)
MSCI AC World Equities (USD) down -17.03 (-0.19%) at 9,168 (YTD: 17.97%; 5YR: 54.6%)
Barclays Global Aggregate Bonds up +0.16 (+0.03%) at 509 (YTD: 6.27%; 5YR: 8.2%)    
    
Selected Equity Indices (Capital returns)    

S&P 500 down -4.12 (-0.14%) at 2,966 (YTD: 18.32%; 5YR: 59.3%)    
NASDAQ down -8.39 (-0.10%) at 8,049 (YTD: 21.30%; 5YR: 90.9%)    
Euro STOXX 50 down -13.66 (-0.38%) at 3,556 (YTD: 18.49%; 5YR: 22.9%)    
FTSE 100 down -33.63 (-0.46%) at 7,213 (YTD: 7.21%; 5YR: 16.1%)    
CAC down -22.40 (-0.40%) at 5,643 (YTD: 19.29%; 5YR: 43.2%)    
DAX down -25.09 (-0.20%) at 12,487 (YTD: 18.26%; 5YR: 45.7%)    
Nikkei 225  up +408.34 (+1.87%) at 22,207 (YTD: 10.95%; 5YR: 48.7%)    
Hang Seng down -43.37 (-0.16%) at 26,478 (YTD: 2.45%; 5YR: 14.4%)    
MSCI Emerging Markets up +5.91 (+0.58%) at 1,017 (YTD: 5.35%; 5YR: 3.5%)    
    
Selected Government Bond Yields    
US 2 Year down -0.02 at 1.57 (began the year at 2.49; 5 years ago it was 0.31)    
US 10 Year down -0.03 at 1.70 (began the year at 2.68; 5 years ago it was 2.14)    
UK 10 Year down -0.07 at 0.64 (began the year at 1.28; 5 years ago it was 1.96)    
Germany 10 Year up +0.01 at -0.45 (began the year at 0.24; 5 years ago it was 0.76)    
France 10 Year up +0.00 at -0.14 (began the year at 0.70; 5 years ago it was 1.13)    
Italy 10 Year up +0.00 at 0.91 (began the year at 2.74; 5 years ago it was 2.42)    
Japan 10 Year up +0.01 at -0.17 (began the year at -0.01; 5 years ago it was 0.49)    
Barclays EM Basket up +0.02 at 5.46 (began the year at 6.22; 5 years ago it was 5.21)
    
Selected Currencies    
$ weakened -0.0015 versus € (-0.14%) at 1.1045 ($: YTD: 3.55%; 5YR: 13.7%)    
€ weakened -0.0081 versus £ (+0.71%) at 1.1478 (€: YTD: -3.03%; 5YR: 8.6%)    
$ weakened -0.0105 versus £ (-0.84%) at 1.2675 ($: YTD: 0.56%; 5YR: 20.5%)    
¥ unchanged 0.0000 versus $ (0.00%) at 108.3700 (¥: YTD: -1.19%; 5YR: -2.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.23 (-0.39%) at 58.99 (YTD: 10.95%; 5YR: -29.0%)    
WTI Crude ($/bbl) down -1.11 (-2.03%) at 53.59 (YTD: 18.01%; 5YR: -34.5%)    
Gold ($/ozt) down -3.43 (-0.23%) at 1489.82 (YTD: 16.17%; 5YR: 20.0%)    
Copper ($/mt) up +22.00 (+0.38%) at 5818.00 (YTD: -2.46%; 5YR: -14.4%)    
    
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