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3 October 2019

03/10/2019

Market Data and Morning Chat

Morning Chat 

Aimed at Europe: While Dominic Raab helmed PMQs in Parliament, Boris took to the stage at the Conservative Party Conference with the pound near the day’s low against the dollar ($1.226). A quip over Parliament (“…a laptop…showing the pizza wheel of doom”), Labour (“fratricidal anti-Semitic Marxists”) then on to Brexit. Some more details about the Northern Irish border – respect the Good Friday agreement, no checks at the border, allow the UK “whole and entire” to withdraw and take-it-or-leave-it rhetoric reiterating no delay – left the pound unchanged.  Then, with the DUP cautiously onboard, sterling rallied. But will Europe be onboard too?

Meanwhile, ADP didn’t help: Investors didn’t care that the variability of the employment survey is high – very high – their focus was the headline number.  Yesterday’s ADP September release was 135,000 versus 140,000 expected and the forecast range 70,000 to 169,000. The miss was slight. Oh, wait, and last month’s number was revised to 157,000 from 195,000 – closer to the estimate, and still above the 110,000 survey low. Seems marginal, but combined with trade worries over the WTO ruling, markets reacted with European equities off 2 to 3%, US 1½% and US treasury yields falling. Non-farm payrolls will tell us more.

Autos are significant drivers of the market: The auto sector has plagued Germany. Auto & associated production accounts for 14% of GDP and dieselgate put the brakes on diesel-powered car sales. No wonder Germany’s flirting with recession. But yesterday Japanese automakers announced double-digit sales declines making their shares sputter. Then Ford (-3.3%) and GM (-4.0%) reversed on mixed results further exhausting any sector optimism. Surprising, maybe, considering increasing miles driven (per the Federal Highways Agency) but not so surprising when you consider the rising 11.8-year age of the US fleet – good news for aftermarket sales, not so for new sales.

Johnson & Johnson (+1.6%) climbs on high of settling two opioid lawsuits yesterday 
WTO assesses the Airbus award against Europe at a record $7.5billion – tariffs to ensue
Boris is looking to suspend Parliament again – but only for 3 days to prep the Queen’s speech
Bernie Saunders needed two stents inserted, possibly blocking his campaign over his health

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -21.47 (-1.70%) at 1,243 (YTD: 14.73%; 5YR: 48.8%)
MSCI AC World Equities (USD) down -155.85 (-1.71%) at 8,936 (YTD: 14.98%; 5YR: 43.5%)
Barclays Global Aggregate Bonds up +1.09 (+0.21%) at 510 (YTD: 6.53%; 5YR: 10.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -52.64 (-1.79%) at 2,888 (YTD: 15.19%; 5YR: 46.7%)    
NASDAQ down -123.44 (-1.56%) at 7,785 (YTD: 17.33%; 5YR: 73.9%)    
Euro STOXX 50 down -104.94 (-2.98%) at 3,413 (YTD: 13.72%; 5YR: 8.9%)    
FTSE 100 down -237.78 (-3.23%) at 7,123 (YTD: 5.86%; 5YR: 9.1%)    
CAC down -174.86 (-3.12%) at 5,423 (YTD: 14.63%; 5YR: 26.6%)    
DAX down -338.58 (-2.76%) at 11,925 (YTD: 12.94%; 5YR: 29.7%)    
Nikkei 225  down -436.87 (-2.01%) at 21,342 (YTD: 6.63%; 5YR: 35.9%)    
Hang Seng down -149.83 (-0.58%) at 25,893 (YTD: 0.18%; 5YR: 12.3%)    
MSCI Emerging Markets down -9.28 (-0.93%) at 989 (YTD: 2.43%; 5YR: -0.8%)    
    
Selected Government Bond Yields    
US 2 Year down -0.02 at 1.46 (began the year at 2.49; 5 years ago it was 0.56)    
US 10 Year down -0.03 at 1.57 (began the year at 2.68; 5 years ago it was 2.43)    
UK 10 Year up +0.03 at 0.50 (began the year at 1.28; 5 years ago it was 2.39)    
Germany 10 Year down -0.02 at -0.57 (began the year at 0.24; 5 years ago it was 0.93)    
France 10 Year down -0.02 at -0.27 (began the year at 0.70; 5 years ago it was 1.26)    
Italy 10 Year down -0.02 at 0.88 (began the year at 2.74; 5 years ago it was 2.31)    
Japan 10 Year down -0.03 at -0.20 (began the year at -0.01; 5 years ago it was 0.51)    
Barclays EM Basket down -0.10 at 5.41 (began the year at 6.22; 5 years ago it was 5.38)
    
Selected Currencies    
$ strengthened +0.0003 versus € (+0.03%) at 1.0955 ($: YTD: 4.34%; 5YR: 12.5%)    
€ strengthened +0.0006 versus £ (-0.05%) at 1.1225 (€: YTD: -0.85%; 5YR: 13.7%)    
$ strengthened +0.0012 versus £ (+0.10%) at 1.2297 ($: YTD: 3.52%; 5YR: 23.0%)    
¥ strengthened +0.0100 versus $ (+0.01%) at 107.1000 (¥: YTD: -2.39%; 5YR: 2.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.03 (-0.05%) at 57.74 (YTD: 8.60%; 5YR: -36.8%)    
WTI Crude ($/bbl) down -0.98 (-1.83%) at 52.64 (YTD: 15.92%; 5YR: -42.2%)    
Gold ($/ozt) up +3.27 (+0.22%) at 1502.72 (YTD: 17.18%; 5YR: 26.1%)    
Copper ($/mt) down -8.00 (-0.14%) at 5678.00 (YTD: -4.81%; 5YR: -14.0%)    
    
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