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21 october 2019

21/10/2019

Market Data and Morning Chat

Morning Chat 

Stupor Saturday: Parliament’s first Saturday session in 37 years should have been a vote on the Boris Brexit deal, but they were distracted by Oliver Letwin’s amendment instead.  His motion, which passed 322 to 306, requires legislation implementing Boris’ deal must be passed before Parliament actually approves the deal – sounds a bit back-to-front, but it doesn’t thwart the deal. Rather, the deal was just “not approved” with the vote on it postponed reducing the strength of sterling a little.  Meanwhile, Boris Johnson wrote to the EU – three times – somewhat muddying the Benn Act waters. Extension? Halloween exit? We’ll have to see. 

A mixed end to a mixed week: The approval-less session combined with the various letters sent to the EU closed the weekend on confusing note. Lawyers will likely get fat paychecks litigating over the legal situation. Equity markets last week anticipated some of the confusion.  The UK indices saw declines between ¾ to 1¼% with individual names all over the place.  Mainly non-sterling-earning companies slipped while domestic economy stocks rallied, though that doesn’t necessarily explain the weekly gain in shares like National Express. European indices were mixed, while US indices rallied about ½% on a great week for corporate earnings.

Can we get clarity, please? The EU will likely consider their response to Boris’ letters – buying time before committing one way or another. The government is expected to table the Withdrawal Agreement Bill to meet the Letwin amendment and Dominic Raab thinks numbers are there to get the deal passed. Elsewhere, US earnings releases continue and we’ll also see durable goods numbers. Canada’s PM Trudeau will find if the blackface brouhaha leaves him red-faced with a minority government or out. There’s also various European economic data releases including German consumer and business confidence surveys to keep us amused. Hopefully, that’ll do.

Japanese import & export trends improve, but not as much as hoped leaving the balance worse
… but their All Industry Activity Index comes in ahead of expectations – make something of that
Coca Cola (+1.8%) shows they can do it as smaller packaging and energy drinks drives sales
Kansas City Southern (+7.3%) delivers better profit than expected and signals further growth
Schlumberger (+1.4%) rigs up better revenues and earnings than expected, but cautious forecast 

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -5.08 (-0.40%) at 1,280 (YTD: 18.15%; 5YR: 56.5%)
MSCI AC World Equities (USD) down -27.84 (-0.30%) at 9,254 (YTD: 19.07%; 5YR: 50.7%)
Barclays Global Aggregate Bonds up +0.43 (+0.08%) at 510 (YTD: 6.56%; 5YR: 9.0%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 down -11.75 (-0.39%) at 2,986 (YTD: 19.12%; 5YR: 53.8%)    
NASDAQ down -67.31 (-0.83%) at 8,090 (YTD: 21.92%; 5YR: 83.0%)    
Euro STOXX 50 down -9.21 (-0.26%) at 3,579 (YTD: 19.26%; 5YR: 19.7%)    
FTSE 100 down -31.75 (-0.44%) at 7,151 (YTD: 6.28%; 5YR: 12.2%)    
CAC down -36.82 (-0.65%) at 5,636 (YTD: 19.14%; 5YR: 38.1%)    
DAX down -21.35 (-0.17%) at 12,634 (YTD: 19.65%; 5YR: 42.2%)    
Nikkei 225  up +56.22 (+0.25%) at 22,549 (YTD: 12.66%; 5YR: 52.3%)    
Hang Seng down -15.03 (-0.06%) at 26,705 (YTD: 3.32%; 5YR: 15.7%)    
MSCI Emerging Markets down -4.37 (-0.42%) at 1,024 (YTD: 6.03%; 5YR: 4.3%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.59 (began the year at 2.49; 5 years ago it was 0.36)    
US 10 Year up +0.02 at 1.77 (began the year at 2.68; 5 years ago it was 2.22)    
UK 10 Year up +0.03 at 0.71 (began the year at 1.28; 5 years ago it was 2.17)    
Germany 10 Year up +0.01 at -0.37 (began the year at 0.24; 5 years ago it was 0.87)    
France 10 Year up +0.00 at -0.08 (began the year at 0.70; 5 years ago it was 1.29)    
Italy 10 Year down 0.00 at 0.92 (began the year at 2.74; 5 years ago it was 2.51)    
Japan 10 Year up +0.01 at -0.14 (began the year at -0.01; 5 years ago it was 0.48)    
Barclays EM Basket down -0.03 at 5.34 (began the year at 6.22; 5 years ago it was 5.20)
    
Selected Currencies    
$ unchanged 0.0000 versus € (0.00%) at 1.1158 ($: YTD: 2.57%; 5YR: 12.4%)    
€ strengthened +0.0003 versus £ (-0.03%) at 1.1584 (€: YTD: -3.92%; 5YR: 9.4%)    
$ strengthened +0.0006 versus £ (+0.05%) at 1.2924 ($: YTD: -1.40%; 5YR: 19.9%)    
¥ weakened -0.1000 versus $ (-0.09%) at 108.5200 (¥: YTD: -1.05%; 5YR: -1.7%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.05 (-0.08%) at 58.91 (YTD: 10.80%; 5YR: -31.0%)    
WTI Crude ($/bbl) down -0.15 (-0.28%) at 53.78 (YTD: 18.43%; 5YR: -35.0%)    
Gold ($/ozt) up +1.36 (+0.09%) at 1491.21 (YTD: 16.28%; 5YR: 19.4%)    
Copper ($/mt) up +67.00 (+1.17%) at 5806.00 (YTD: -2.67%; 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