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29 October 2019

29/10/2019

Market Data and Morning Chat

Morning Chat

Want to take you higher: Despite votes in various Houses – the UK Parliament rejected Boris’ December 12th election bid while Nancy Pelosi and the Democrats plan finally to vote to formalise the impeachment inquiry – equity markets were getting stronger with major indices up ¼ to 1%, enough to push the S&P500 (+0.6%) to an all-time high on the close. Fittingly it was Microsoft that lit a fire. The S&P500 is up about 21% year-to-date, but carve out the tech sector and it’s only 14% and half the tech gain is from five companies - Apple, Microsoft, Visa, Mastercard and Oracle.

This is the cloud you’re looking for: Microsoft leapt 2.5% to an all-time high on news they had surprisingly beaten favorites Amazon to win the US government’s Joint Enterprise Defense Infrastructure or JEDI contract.  It’s a big win for Microsoft, who will provide cloud storage capacity for sensitive military applications & data storage. They’ll earn $10billion over 10 years, so overall, the contract won’t move the needle on earnings so significantly (it’s only about 1.1% of revenues), but it does highlight Microsoft’s Azure offering is now a force for Amazon’s Web Services to reckon with – and that’s no mind trick.
 
Any regrets AKK? We’re consumed by Brexit news, but Germany is consumed by their own political dramas.  The Grand Coalition or GroKo of Merkel’s CDU and the SPD looks under threat with the SPD’s end-November leadership election a bout between coalition supporters and skeptics. Then, Germany heard their EU bill rises from to €15billion next year to €33billion by 2027; Angela won’t be pleased. Next, the CDU were pushed into third in Thuringia behind socialists Die Linke and euro-sceptics AfD. Now, thanks to the defeat, CDU party leader Annegret Kramp-Karrenbauer, or AKK, is facing resistance to follow Angela as Chancellor.

Flextension (noun) a Brexit prolongation capable of reaching January 31 without annoying Macron
BP issued forecast-beating earnings today led by refining that should leave the shares pumped
Beyond Meat (-9.9%) shares were peppered despite harvesting better-than-expected earnings
Alphabet (+0.4% net) gave back ground after finding results were too mixed for the markets
Airbus has Pratt-fall as US FAA ordered step up in inspections of A220 engines after issues

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +5.64 (+0.43%) at 1,302 (YTD: 20.18%; 5YR: 55.8%)
MSCI AC World Equities (USD) up +36.49 (+0.39%) at 9,407 (YTD: 21.05%; 5YR: 50.0%)
Barclays Global Aggregate Bonds down -1.39 (-0.27%) at 508 (YTD: 6.09%; 5YR: 8.9%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +16.87 (+0.56%) at 3,039 (YTD: 21.24%; 5YR: 53.3%)    
NASDAQ up +82.87 (+1.01%) at 8,326 (YTD: 25.48%; 5YR: 83.0%)    
Euro STOXX 50 up +1.01 (+0.03%) at 3,626 (YTD: 20.80%; 5YR: 20.0%)    
FTSE 100 up +6.81 (+0.09%) at 7,331 (YTD: 8.96%; 5YR: 13.6%)    
CAC up +8.42 (+0.15%) at 5,731 (YTD: 21.14%; 5YR: 39.4%)    
DAX up +47.20 (+0.37%) at 12,942 (YTD: 22.57%; 5YR: 42.5%)    
Nikkei 225  up +106.86 (+0.47%) at 22,974 (YTD: 14.79%; 5YR: 47.7%)    
Hang Seng down -99.77 (-0.37%) at 26,791 (YTD: 3.66%; 5YR: 12.5%)    
MSCI Emerging Markets up +7.13 (+0.69%) at 1,043 (YTD: 7.99%; 5YR: 3.8%)    
    
Selected Government Bond Yields    
US 2 Year unchanged at 1.64 (began the year at 2.49; 5 years ago it was 0.48)    
US 10 Year unchanged at 1.84 (began the year at 2.68; 5 years ago it was 2.32)    
UK 10 Year up +0.04 at 0.72 (began the year at 1.28; 5 years ago it was 2.26)    
Germany 10 Year down 0.00 at -0.34 (began the year at 0.24; 5 years ago it was 0.90)    
France 10 Year down -0.01 at -0.04 (began the year at 0.70; 5 years ago it was 1.28)    
Italy 10 Year down -0.01 at 0.99 (began the year at 2.74; 5 years ago it was 2.50)    
Japan 10 Year up +0.02 at -0.11 (began the year at -0.01; 5 years ago it was 0.46)    
Barclays EM Basket up +0.03 at 5.36 (began the year at 6.22; 5 years ago it was 5.17)
    
Selected Currencies    
$ strengthened +0.0010 versus € (+0.09%) at 1.1092 ($: YTD: 3.14%; 5YR: 12.9%)    
€ weakened -0.0007 versus £ (+0.06%) at 1.1592 (€: YTD: -3.99%; 5YR: 9.1%)    
$ strengthened +0.0007 versus £ (+0.05%) at 1.2857 ($: YTD: -0.87%; 5YR: 20.1%)    
¥ unchanged 0.0000 versus $ (0.00%) at 108.9400 (¥: YTD: -0.66%; 5YR: -0.7%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.25 (-0.41%) at 60.74 (YTD: 14.24%; 5YR: -29.1%)    
WTI Crude ($/bbl) down -0.65 (-1.15%) at 55.81 (YTD: 22.90%; 5YR: -31.5%)    
Gold ($/ozt) up +0.04 (+0.00%) at 1492.53 (YTD: 16.38%; 5YR: 23.1%)    
Copper ($/mt) down -17.00 (-0.29%) at 5908.00 (YTD: -0.96%; 5YR: -13.1%)    
    
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