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24 October 2019

24/10/2019

Market Data and Morning Chat

Morning Chat 

Call me: Boris Johnson probably felt he was dreaming, the Withdrawal Agreement Bill passed the second reading 329 to 299. That was supposed to be the hardest part.  However, with MPs rejecting the short timetable to, one way or another, enact the Bill to trigger an October 31st Brexit, Johnson paused the Bill to await the EU decision on any extension. So far, they’ve kept him hanging on the telephone while the matter is debated, although Donald Tusk has recommended the EU27 grant an extension either to January 31, or a “flex-tension” with rolling bi-weekly exit dates. Now we wait.

Not to say the European markets like waiting: It was an understandably mixed day for Continental equities. On one hand, the Brexit situation looks somewhat clearer, but on the other, there was no answer to the “when” question. Pick your exchange – Germany closed up, Italy down and France saw so small a move you could call it flat.  Here in the UK, equities on average were up just over ½% led by companies such as newly divorced Prudential (+2.9%), British American Tobacco (+2.1%) and Carnival (+2.0%) – all internationally-focussed names that you would think would have suffered from sterling’s rally yesterday. 

Oil tell you some more: The Energy Information Administration surprised investors – US commercial crude inventories fell by 1.7million barrels last week.  Yet at this time of year its very unusual to see a draw – the driving season has closed, more power is used for summer air conditioning than winter heating, and refineries scale back operations – oil inventories should rise.  Consequently, crude prices have rallied with Brent up 2.2% and West Texas up 3.0% – big moves retracing the whole of October’s declines.  Coupled with OPEC’s mooted December production cuts, investors may well fear global supplies tightening pushing oil prices higher still.

ABB (+3.5%) engineers some decent orders growth despite auto-sector robot slump
Tesla (+20.2% afterhours) charges up on surprise profit of $1.86 when a 24¢ loss was expected
Peugeot’s (+3.2%) sports better revenues driven by more profitable SUV sales
… but Ford (-2.6%)has a bumpier ride with higher warranty costs and slower China sales  
Paypal (+7.8% afterhours) processes better-than-expected earnings and guidance
Azure is the new rosy for Microsoft (+0.6%) as it helps deliver revenue and earnings beat
Boeing (+1.0%) sales throttled back by 21% as 737Max still stuck on the tarmac

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +2.21 (+0.17%) at 1,288 (YTD: 18.87%; 5YR: 55.6%)
MSCI AC World Equities (USD) up +17.33 (+0.19%) at 9,309 (YTD: 19.79%; 5YR: 50.1%)
Barclays Global Aggregate Bonds up +0.08 (+0.02%) at 510 (YTD: 6.54%; 5YR: 9.6%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 up +8.53 (+0.28%) at 3,005 (YTD: 19.85%; 5YR: 52.9%)    
NASDAQ up +15.50 (+0.19%) at 8,120 (YTD: 22.37%; 5YR: 81.1%)    
Euro STOXX 50 up +2.07 (+0.06%) at 3,607 (YTD: 20.17%; 5YR: 19.0%)    
FTSE 100 up +48.25 (+0.67%) at 7,261 (YTD: 7.92%; 5YR: 13.6%)    
CAC down -4.25 (-0.08%) at 5,653 (YTD: 19.51%; 5YR: 36.9%)    
DAX up +43.50 (+0.34%) at 12,798 (YTD: 21.21%; 5YR: 42.4%)    
Nikkei 225  up +125.22 (+0.55%) at 22,751 (YTD: 13.67%; 5YR: 48.8%)    
Hang Seng up +168.93 (+0.64%) at 26,736 (YTD: 3.44%; 5YR: 14.7%)    
MSCI Emerging Markets down -3.13 (-0.30%) at 1,031 (YTD: 6.75%; 5YR: 4.7%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.57 (began the year at 2.49; 5 years ago it was 0.39)    
US 10 Year down -0.02 at 1.75 (began the year at 2.68; 5 years ago it was 2.27)    
UK 10 Year down -0.03 at 0.69 (began the year at 1.28; 5 years ago it was 2.23)    
Germany 10 Year down 0.00 at -0.40 (began the year at 0.24; 5 years ago it was 0.89)    
France 10 Year down 0.00 at -0.10 (began the year at 0.70; 5 years ago it was 1.31)    
Italy 10 Year down 0.00 at 0.93 (began the year at 2.74; 5 years ago it was 2.52)    
Japan 10 Year down -0.01 at -0.15 (began the year at -0.01; 5 years ago it was 0.47)    
Barclays EM Basket down -0.02 at 5.33 (began the year at 6.22; 5 years ago it was 5.18)
    
Selected Currencies    
$ weakened -0.0014 versus € (-0.13%) at 1.1135 ($: YTD: 2.77%; 5YR: 12.0%)    
€ weakened -0.0030 versus £ (+0.26%) at 1.1607 (€: YTD: -4.11%; 5YR: 9.4%)    
$ weakened -0.0049 versus £ (-0.38%) at 1.2924 ($: YTD: -1.40%; 5YR: 19.6%)    
¥ strengthened +0.0900 versus $ (+0.08%) at 108.6000 (¥: YTD: -0.98%; 5YR: -0.5%)    
    
Selected Commodities    

Brent Crude ($/bbl) down -0.14 (-0.23%) at 60.37 (YTD: 13.54%; 5YR: -29.2%)    
WTI Crude ($/bbl) up +1.61 (+2.97%) at 55.77 (YTD: 22.81%; 5YR: -32.3%)    
Gold ($/ozt) up +0.09 (+0.01%) at 1492.24 (YTD: 16.36%; 5YR: 21.2%)    
Copper ($/mt) up +63.00 (+1.08%) at 5881.00 (YTD: -1.41%; 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