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28 October 2019

28/10/2019

Market Data and Morning Chat

Morning Chat

A plum run: We started last week considering the possibilities of Boris Johnson’s newly-minted deal passing in Parliament and any formal pronouncement of a US-China trade deal.  Boris’s deal passed in principal – amazing – but his timetable did not. The pound gave ground, falling 1.2% on the week and UK bond yields eased slightly. Equities, however, continued to rally. The broad UK market gained 1.9% with the continental markets up 1-2% and US ¾ to 2% with tech stocks reasonably robust on US-China deal optimism.  It also didn’t hurt that corporate earnings were more positive than expected albeit only modestly so. 

Trump’s less than peachy week: It’s not his lowest approval rating – the nadir came late-2017 – but Donald Trump’s 40.7% shows a 2% decline within just a few weeks. More problematically, when Trump polls over about 42.8% he generally polls as the victor in the 2020 Presidential election. When he polls in the low 41’s or lower, he doesn’t.  Last week’s 1% decline stemmed from the damaging deposition of long-serving US diplomat William Taylor in the impeachment inquiries.  Taylor’s testimony and detailed notes appears to blow apart the White House defence that the Biden investigation request wasn’t tied to Ukraine aid.

Maybe we’ll have a berry good time: October draw’s to a close in a few days and for equities, we could close in positive territory – pretty good considering October’s often a lesser month. However it could still be, the last two days of the month are very data heavy. We’ll discover if the US Fed will trim rates again – as expected – along with the first estimate on Q3 growth. The UK will get detail over any Brexit extension – and possible election! There’s the usual flash PMI data and then Eurozone Q3 GDP estimate.  Then we start November with Non-farm payrolls!   

The EU is to decide the Brexit extension today amid reports Macron will agree to January 31st 
… meanwhile Angel Merkel’s CDU slipped below the AfD in the Thuringia state elections
Anheuser-Busch (-11.1%) falls flat on weak volumes in China & Brazil missing expectations
Illinois Tool Works (+7.3%) ratchets up margins despite revenue wrench in six of seven divisions 
HSBC (-2.7% in Hong Kong) declared a 12% decline in profits and plans to simplify operations
LVMH (+1.8%) is reportedly planning a breakfast of Tiffany’s in $14.5billion take-over offer

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +3.72 (+0.29%) at 1,296 (YTD: 19.66%; 5YR: 55.4%)
MSCI AC World Equities (USD) up +30.17 (+0.32%) at 9,371 (YTD: 20.58%; 5YR: 49.6%)
Barclays Global Aggregate Bonds down -0.93 (-0.18%) at 509 (YTD: 6.38%; 5YR: 9.1%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +12.26 (+0.41%) at 3,023 (YTD: 20.57%; 5YR: 52.3%)    
NASDAQ up +57.32 (+0.70%) at 8,243 (YTD: 24.23%; 5YR: 80.6%)    
Euro STOXX 50 up +3.31 (+0.09%) at 3,625 (YTD: 20.77%; 5YR: 19.4%)    
FTSE 100 down -3.78 (-0.05%) at 7,324 (YTD: 8.86%; 5YR: 14.4%)    
CAC up +37.82 (+0.67%) at 5,722 (YTD: 20.96%; 5YR: 39.1%)    
DAX up +22.41 (+0.17%) at 12,895 (YTD: 22.12%; 5YR: 42.2%)    
Nikkei 225  up +67.46 (+0.30%) at 22,867 (YTD: 14.25%; 5YR: 49.2%)    
Hang Seng up +214.29 (+0.80%) at 26,882 (YTD: 4.01%; 5YR: 14.3%)    
MSCI Emerging Markets down -1.57 (-0.15%) at 1,036 (YTD: 7.25%; 5YR: 4.4%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.63 (began the year at 2.49; 5 years ago it was 0.39)    
US 10 Year up +0.01 at 1.81 (began the year at 2.68; 5 years ago it was 2.30)    
UK 10 Year up +0.06 at 0.68 (began the year at 1.28; 5 years ago it was 2.24)    
Germany 10 Year down -0.01 at -0.37 (began the year at 0.24; 5 years ago it was 0.88)    
France 10 Year down 0.00 at -0.07 (began the year at 0.70; 5 years ago it was 1.28)    
Italy 10 Year up +0.03 at 0.98 (began the year at 2.74; 5 years ago it was 2.53)    
Japan 10 Year up +0.01 at -0.14 (began the year at -0.01; 5 years ago it was 0.46)    
Barclays EM Basket up +0.00 at 5.33 (began the year at 6.22; 5 years ago it was 5.18)
    
Selected Currencies    
$ weakened -0.0016 versus € (-0.14%) at 1.1090 ($: YTD: 3.16%; 5YR: 12.9%)    
€ strengthened +0.0012 versus £ (-0.10%) at 1.1563 (€: YTD: -3.74%; 5YR: 9.5%)    
$ weakened -0.0005 versus £ (-0.04%) at 1.2823 ($: YTD: -0.60%; 5YR: 20.5%)    
¥ strengthened +0.0400 versus $ (+0.04%) at 108.7200 (¥: YTD: -0.86%; 5YR: -0.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.29 (-0.47%) at 61.19 (YTD: 15.08%; 5YR: -28.2%)    
WTI Crude ($/bbl) up +0.44 (+0.79%) at 56.46 (YTD: 24.33%; 5YR: -30.5%)    
Gold ($/ozt) up +2.98 (+0.20%) at 1507.53 (YTD: 17.55%; 5YR: 22.7%)    
Copper ($/mt) up +45.00 (+0.77%) at 5925.00 (YTD: -0.67%; 5YR: -11.4%)    
    
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