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17 October 2019

17/10/2019

Market Data and Morning Chat

Morning Chat 

Mr. Johnson’s wild ride: We didn’t get a deal by Barnier’s midnight deadline. We didn’t get a deal by midday either. The pound dropped like it had gone bungee-jumping. But discussions continued, and at the heart of them appeared to be the issue of consent and which customs territory Northern Ireland would be in. Then a tweet – two “senior EU sources” stated the DUP agreed. The pound soared – wait – Arlene Foster said they hadn’t. But with Varadkar briefing, Boris Brusseling, Barnier postponing not cancelling his debrief, and Donald Tusk saying all should be clear within hours, sterling optimism again returned.

More than a bunch of bankers: Another day in earnings season and another tranche of banks posted better-than-expected earnings. Bank of New York Mellon (+0.4%) managed to control costs helping their numbers, US Bancorp (+1.5%) saw better mortgage fee income help them and Bank of America (+1.5%) had deal fees flowing. But even more than the banks, Asos showed real style recovering from their warehouse issues as shares rallied 28.4% while Abbott Labs (-0.2%) met numbers with sales gains but failing to lift shares. As for Netflix? They were weak on subscribers but beat on earnings lifting shares 10.5% aftermarket.

So what did it all do for the markets? The eager anticipation of a Brexit solution boosted sterling, but you know that.  Meanwhile, it was also the trigger for a further slide in the UK’s bigger company shares, knocking them around ½% while Brexit resolution enthusiasm boosted European shares. But did you see that US retail sales failed to check out, falling 0.3%, 0.6% shy of the target and the first decline in over half a year? Yes, August’s number was revised up, but the miss hurt meaning US equities slipped up to ¼% and helped boost gold over ½%

Carrie Lam confirms Hong Kong in technical recession thanks to four months of unrest
Unilever (+0.9%) earnings just short of estimates as ice cream sales melted versus forecasts
CSX railway (+4.1% aftermarket) trained hard to reduce fat in costs and beat on earnings
Nestle (+0.1%) announces in-line earnings and sweetens buyback plans by $20billion 

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +0.04 (+0.00%) at 1,283 (YTD: 18.46%; 5YR: 60.2%)
MSCI AC World Equities (USD) down -4.95 (-0.05%) at 9,253 (YTD: 19.06%; 5YR: 54.3%)
Barclays Global Aggregate Bonds up +0.23 (+0.04%) at 509 (YTD: 6.25%; 5YR: 8.7%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 down -5.99 (-0.20%) at 2,990 (YTD: 19.26%; 5YR: 58.5%)    
NASDAQ down -24.52 (-0.30%) at 8,124 (YTD: 22.44%; 5YR: 90.8%)    
Euro STOXX 50 up +0.60 (+0.02%) at 3,599 (YTD: 19.92%; 5YR: 21.5%)    
FTSE 100 down -43.69 (-0.61%) at 7,168 (YTD: 6.54%; 5YR: 13.6%)    
CAC down -5.15 (-0.09%) at 5,697 (YTD: 20.42%; 5YR: 41.3%)    
DAX up +40.32 (+0.32%) at 12,670 (YTD: 19.99%; 5YR: 43.2%)    
Nikkei 225  down -21.06 (-0.09%) at 22,452 (YTD: 12.18%; 5YR: 54.5%)    
Hang Seng up +126.48 (+0.47%) at 26,791 (YTD: 3.66%; 5YR: 16.4%)    
MSCI Emerging Markets up +4.83 (+0.47%) at 1,024 (YTD: 6.04%; 5YR: 4.8%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.57 (began the year at 2.49; 5 years ago it was 0.37)    
US 10 Year down -0.02 at 1.72 (began the year at 2.68; 5 years ago it was 2.19)    
UK 10 Year up +0.02 at 0.71 (began the year at 1.28; 5 years ago it was 2.19)    
Germany 10 Year down -0.01 at -0.40 (began the year at 0.24; 5 years ago it was 0.86)    
France 10 Year down -0.01 at -0.11 (began the year at 0.70; 5 years ago it was 1.30)    
Italy 10 Year down -0.02 at 0.91 (began the year at 2.74; 5 years ago it was 2.50)    
Japan 10 Year up +0.01 at -0.16 (began the year at -0.01; 5 years ago it was 0.47)    
Barclays EM Basket down -0.07 at 5.39 (began the year at 6.22; 5 years ago it was 5.23)
    
Selected Currencies    
$ strengthened +0.0010 versus € (+0.09%) at 1.1071 ($: YTD: 3.33%; 5YR: 13.3%)    
€ strengthened +0.0067 versus £ (-0.58%) at 1.1526 (€: YTD: -3.44%; 5YR: 9.4%)    
$ strengthened +0.0085 versus £ (+0.66%) at 1.2762 ($: YTD: -0.13%; 5YR: 20.7%)    
¥ weakened -0.1000 versus $ (-0.09%) at 108.7700 (¥: YTD: -0.82%; 5YR: -1.9%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.25 (-0.43%) at 58.31 (YTD: 9.67%; 5YR: -31.5%)    
WTI Crude ($/bbl) up +0.55 (+1.04%) at 53.36 (YTD: 17.51%; 5YR: -35.5%)    
Gold ($/ozt) up +0.84 (+0.06%) at 1491.02 (YTD: 16.26%; 5YR: 20.4%)    
Copper ($/mt) down -43.00 (-0.74%) at 5730.00 (YTD: -3.94%; 5YR: -12.5%)    
    
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