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6 October 2019

06/11/2019

Market Data and Morning Chat

Morning Chat 

A pause-and-take-it-in kind of day: After three indices hit new all-time highs Monday, US equities were mixed yesterday – Dow up, Nasdaq flat and S&P down – but with limited movement overall.  Europe posted gains – mainly trading on Monday’s afterglow.  It’s understandable. Technical traders – those who trade on the basis of chart patterns – saw equities looking over-bought. Plus, a wide range of US economics offered a mixed picture – a balance of trade pick-up, weaker-than-hoped Markit survey but stronger ISM non-manufacturing PMI and a mildly disappointing Jolts report. Enough to boost the dollar but consequently weigh on some equities keeping the moves modest.

Something more to take in: As equity gains have lifted spirits, you might have missed the shift in bond yields.  In the UK the bulk of the yield curve (the yields of various bonds considered in duration or maturity order) has shifted up by nearly a third of a percent – the 10-year yield has risen from around 0.45% to 0.73% – although the shape remains ladle-like dipping at 2 to 5 years. Meanwhile, in the US, the increase is similar for 1-year or longer bonds, but pleasingly the curve has transformed from a partially-inverted, growth-warning shape to a reasonably normal graph.

Now the campaigning has started: The outcome of the December 12th election is likely to have a significant impact on the UK, yet it is also one of the more opaque to pollsters – not that they are renown for the accuracy of their prognostications.  So, many favour the bookies view – broadly, they have a hung parliament as favorite, Tory majority at evens and Labour majority around 14 to 1. Whereas, pollsters ICM, ComRes and most-accurate-last-time Survation put the Tory lead at a tight 7-8% (on past trends, a clear 6% is needed for a majority) with the rest estimating 11-16%.

One election sure-thing – Philip Hammond won’t return as he is standing down as an MP.
Interestingly, Boris’s Uxbridge constituency has a lot of students and only a 5,000 majority.
Sugar’s not as sweet for AB Foods (+5.6% ) but Primark and Twinings brew up profit increase
Imperial Brands (+0.6%) see reasonable outlook through the smoke of weak operating profits
Weir Group (+3.3%) gains despite oil problems as mining side digs deep with high margins
Kroger’s (+11.4%) “Restock” program to update its offering begins to set the tills ringing 

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +2.01 (+0.15%) at 1,321 (YTD: 21.90%; 5YR: 54.3%)
MSCI AC World Equities (USD) down -9.05 (-0.09%) at 9,528 (YTD: 22.60%; 5YR: 50.0%)
Barclays Global Aggregate Bonds down -2.91 (-0.57%) at 508 (YTD: 6.09%; 5YR: 11.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -3.65 (-0.12%) at 3,075 (YTD: 22.65%; 5YR: 51.4%)    
NASDAQ up +1.48 (+0.02%) at 8,435 (YTD: 27.12%; 5YR: 81.8%)    
Euro STOXX 50 up +11.31 (+0.31%) at 3,677 (YTD: 22.49%; 5YR: 18.5%)    
FTSE 100 up +18.39 (+0.25%) at 7,388 (YTD: 9.81%; 5YR: 12.8%)    
CAC up +22.59 (+0.39%) at 5,847 (YTD: 23.59%; 5YR: 38.3%)    
DAX up +12.22 (+0.09%) at 13,149 (YTD: 24.52%; 5YR: 40.2%)    
Nikkei 225  up +51.83 (+0.22%) at 23,304 (YTD: 16.43%; 5YR: 38.8%)    
Hang Seng down -9.84 (-0.04%) at 27,674 (YTD: 7.07%; 5YR: 17.0%)    
MSCI Emerging Markets up +6.67 (+0.63%) at 1,071 (YTD: 10.92%; 5YR: 8.1%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.61 (began the year at 2.49; 5 years ago it was 0.55)    
US 10 Year down -0.01 at 1.85 (began the year at 2.68; 5 years ago it was 2.39)    
UK 10 Year up +0.05 at 0.78 (began the year at 1.28; 5 years ago it was 2.25)    
Germany 10 Year down -0.06 at -0.37 (began the year at 0.24; 5 years ago it was 0.83)    
France 10 Year down -0.04 at -0.06 (began the year at 0.70; 5 years ago it was 1.19)    
Italy 10 Year down -0.03 at 0.99 (began the year at 2.74; 5 years ago it was 2.38)    
Japan 10 Year down -0.05 at -0.19 (began the year at -0.01; 5 years ago it was 0.47)    
Barclays EM Basket down -0.02 at 5.46 (began the year at 6.22; 5 years ago it was 5.19)
    
Selected Currencies    
$ weakened -0.0008 versus € (-0.07%) at 1.1076 ($: YTD: 3.28%; 5YR: 10.7%)    
€ strengthened +0.0005 versus £ (-0.04%) at 1.1624 (€: YTD: -4.25%; 5YR: 9.9%)    
$ weakened -0.0007 versus £ (-0.05%) at 1.2878 ($: YTD: -1.04%; 5YR: 18.7%)    
¥ strengthened +0.1500 versus $ (+0.14%) at 108.9800 (¥: YTD: -0.62%; 5YR: 5.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.30 (-0.48%) at 62.83 (YTD: 18.17%; 5YR: -23.5%)    
WTI Crude ($/bbl) up +0.69 (+1.22%) at 57.23 (YTD: 26.03%; 5YR: -27.3%)    
Gold ($/ozt) up +2.50 (+0.17%) at 1486.05 (YTD: 15.88%; 5YR: 30.1%)    
Copper ($/mt) up +63.00 (+1.07%) at 5940.00 (YTD: -0.42%; 5YR: -10.5%)    
    
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