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9 October 2019

09/10/2019

Market Data and Morning Chat

Morning Chat 

Maybe if we locked them all in a room ‘til Halloween: Sterling slid against the dollar and euro, while European equities slipped ¾ to 1¼% yesterday as the Brexit negotiations appear to have soured.  A “source” at number 10 suggested Angela Merkel opined the only way to break the deadlock was for Northern Ireland to permanently accept EU single market rules over trade in goods – anathema to any UK Unionist MP.  Tories appear to want the EU to compromise. Labour is accusing the Tories of collapsing the talks, while Donald Tusk was asking “quo vadis” – he should ask “quid vis”.

Maybe we should lock Trump and Xi in too: US stocks also slid, down ½ to ¾% as US-China trade negotiations appear to have soured – a theme there. It started with the South China Morning Post’s report that Vice Premier Liu He will not be a “special envoy” when he travels to Washington – not a good sign. Moreover, China’ Ministry of Commerce spokesperson told the US to stop commenting on China’s domestic issues (read human rights violations in US-speak). Meanwhile the US banned 28 companies from working with US firms without a licence. Unsurprisingly, it left trade deal hopes dimmer.

And where’s the key? Well, it’s not all bad news, there was some positive economic data in North America. Good Canadian housing starts. Then, the US IBD/TIPP economic optimism index rose more than expected and pointed to optimism.  Moreover, the personal financial outlook (how Americans feel about their own finances) also strengthened. Also, US producer prices saw the largest decline since the early 2019 – implying less inflationary pressures and reducing the inflation burden of the Fed decisions. Oh, and Fed Chairman Jerome Powell announced the Fed would soon follow the stimulative policy of growing their balance sheet which should help.

New IMF head Kristalina Georgieva warns of trade-induced synchronised global slowdown 
… but the equity market futures are generally positive (or flat for the UK)
EasyJet (-7.6%) shares hit travel-sector turbulence despite on-time arrival at profit targets
US FOMC minutes and JOLTS report due today with 7.191million job openings expected

Market Data
 

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -13.05 (-1.04%) at 1,245 (YTD: 14.88%; 5YR: 51.5%)
MSCI AC World Equities (USD) down -116.46 (-1.28%) at 8,949 (YTD: 15.15%; 5YR: 45.7%)
Barclays Global Aggregate Bonds down -0.58 (-0.11%) at 512 (YTD: 6.92%; 5YR: 9.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -45.73 (-1.56%) at 2,893 (YTD: 15.41%; 5YR: 50.0%)    
NASDAQ down -132.52 (-1.67%) at 7,824 (YTD: 17.91%; 5YR: 78.7%)    
Euro STOXX 50 down -38.48 (-1.11%) at 3,433 (YTD: 14.37%; 5YR: 12.8%)    
FTSE 100 down -54.73 (-0.76%) at 7,143 (YTD: 6.17%; 5YR: 11.1%)    
CAC down -64.99 (-1.18%) at 5,457 (YTD: 15.35%; 5YR: 31.8%)    
DAX down -127.23 (-1.05%) at 11,970 (YTD: 13.37%; 5YR: 32.9%)    
Nikkei 225  down -131.40 (-0.61%) at 21,456 (YTD: 7.20%; 5YR: 38.6%)    
Hang Seng down -161.81 (-0.62%) at 25,732 (YTD: -0.44%; 5YR: 9.3%)    
MSCI Emerging Markets down -0.21 (-0.02%) at 994 (YTD: 2.92%; 5YR: -1.4%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.42 (began the year at 2.49; 5 years ago it was 0.44)    
US 10 Year unchanged at 1.53 (began the year at 2.68; 5 years ago it was 2.31)    
UK 10 Year down -0.04 at 0.42 (began the year at 1.28; 5 years ago it was 2.26)    
Germany 10 Year up +0.01 at -0.59 (began the year at 0.24; 5 years ago it was 0.91)    
France 10 Year up +0.00 at -0.26 (began the year at 0.70; 5 years ago it was 1.25)    
Italy 10 Year down 0.00 at 0.84 (began the year at 2.74; 5 years ago it was 2.31)    
Japan 10 Year down -0.01 at -0.21 (began the year at -0.01; 5 years ago it was 0.49)    
Barclays EM Basket up +0.01 at 5.38 (began the year at 6.22; 5 years ago it was 5.28)
    
Selected Currencies    
$ weakened -0.0005 versus € (-0.05%) at 1.0958 ($: YTD: 4.31%; 5YR: 13.6%)    
€ strengthened +0.0019 versus £ (-0.17%) at 1.1133 (€: YTD: -0.03%; 5YR: 14.1%)    
$ strengthened +0.0014 versus £ (+0.11%) at 1.2201 ($: YTD: 4.28%; 5YR: 24.3%)    
¥ weakened -0.0200 versus $ (-0.02%) at 107.1700 (¥: YTD: -2.32%; 5YR: 0.7%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.09 (-0.15%) at 57.99 (YTD: 9.07%; 5YR: -34.3%)    
WTI Crude ($/bbl) down -0.12 (-0.23%) at 52.63 (YTD: 15.90%; 5YR: -39.7%)    
Gold ($/ozt) up +2.24 (+0.15%) at 1507.79 (YTD: 17.57%; 5YR: 23.2%)    
Copper ($/mt) down -46.50 (-0.81%) at 5675.50 (YTD: -4.85%; 5YR: -14.5%)    
    
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