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11 October 2019

11/10/2019

Market Data and Morning Chat

Morning Chat 

The bad news, the good news: So we had various European stats agencies releasing data yesterday. France had industrial production – ouch, worse than expected. The UK’s industrial production – nope, not great. UK monthly GDP number? No, sorry, it was marginally weak. But, there, that’s done. Italian industrial output was a bit better than hoped. UK construction output? It was expected to fall 0.2%, but came in 2.4% higher! Wow! Oh, and the UK three-month (-0.3% v +0.1% expected) and year-on-year (+1.1% v +0.9% expected) GDP numbers were better than expected thanks to revisions to prior months. So, the markets? 

Oil right, I’ll tell you: Brent and West Texas Intermediate oil prices both saw decent gains, rising 2.1% and 2.5% respectively.  Those gains came despite another seasonally-typical increase in US inventories.  The gains also came despite the Energy Information Administration publishing updated short-term price forecasts that scalped more than trimmed $5 a barrel off last month’s estimate (the EIA expects rising inventories as supply disruptions will be offset by increasing economic uncertainty).  Meanwhile, gold lost a little shine, falling 0.7% and some of the industrial metals, like copper (+1.6%), cobalt (+2.2%), also saw a decent 1.6%. Hmmm, what’s going on?

Relative optimism: When economically correlated goods like oil, copper and cobalt rise, and inversely correlated goods like gold decline, it’s indicative of a more optimistic outlook.  So too rising equity markets which they were, with gains of ½ to 1¼% across most major markets – save the UK. Why? Well, an emergent positive tone to the US-China trade talks after a turbulent couple of days.  Moreover, Trump tweeted he’ll meet Vice Premier Liu He – no, that’s actually a good thing. And the UK? Well, equities fell when sterling rallied after a joint UK-Irish statement averring “a pathway to a possible deal”. See? Optimism.

US inflation remained, unsurprisingly, at 1.7% as German inflation fell to an 18-month low
Those metals prices helped Antofagasta (+4.5%) and Anglo-American (+4.0%) lead the index
While the Brexit optimism allowed Lloyds (+3.9%) to bank a solid gain too
Plus, the futures are all showing gains… well, except for the UK thanks to sterling again

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +6.45 (+0.52%) at 1,258 (YTD: 16.14%; 5YR: 55.3%)
MSCI AC World Equities (USD) up +53.78 (+0.60%) at 9,062 (YTD: 16.60%; 5YR: 49.9%)
Barclays Global Aggregate Bonds down -1.36 (-0.27%) at 510 (YTD: 6.44%; 5YR: 9.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +18.73 (+0.64%) at 2,938 (YTD: 17.20%; 5YR: 54.1%)    
NASDAQ up +47.04 (+0.60%) at 7,951 (YTD: 19.83%; 5YR: 85.9%)    
Euro STOXX 50 up +31.85 (+0.92%) at 3,494 (YTD: 16.41%; 5YR: 16.8%)    
FTSE 100 up +19.86 (+0.28%) at 7,186 (YTD: 6.81%; 5YR: 13.4%)    
CAC up +69.91 (+1.27%) at 5,569 (YTD: 17.72%; 5YR: 36.7%)    
DAX up +69.94 (+0.58%) at 12,164 (YTD: 15.20%; 5YR: 38.4%)    
Nikkei 225  up +246.89 (+1.15%) at 21,799 (YTD: 8.91%; 5YR: 42.5%)    
Hang Seng up +589.29 (+2.29%) at 26,297 (YTD: 1.75%; 5YR: 13.9%)    
MSCI Emerging Markets up +3.49 (+0.35%) at 996 (YTD: 3.18%; 5YR: 0.7%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.53 (began the year at 2.49; 5 years ago it was 0.42)    
US 10 Year down -0.01 at 1.66 (began the year at 2.68; 5 years ago it was 2.28)    
UK 10 Year up +0.13 at 0.59 (began the year at 1.28; 5 years ago it was 2.22)    
Germany 10 Year down -0.01 at -0.48 (began the year at 0.24; 5 years ago it was 0.89)    
France 10 Year down -0.01 at -0.15 (began the year at 0.70; 5 years ago it was 1.25)    
Italy 10 Year down -0.01 at 0.95 (began the year at 2.74; 5 years ago it was 2.32)    
Japan 10 Year up +0.02 at -0.19 (began the year at -0.01; 5 years ago it was 0.50)    
Barclays EM Basket up +0.03 at 5.42 (began the year at 6.22; 5 years ago it was 5.30)
    
Selected Currencies    
$ weakened -0.0003 versus € (-0.03%) at 1.1020 ($: YTD: 3.77%; 5YR: 12.8%)    
€ weakened -0.0055 versus £ (+0.49%) at 1.1307 (€: YTD: -1.57%; 5YR: 12.4%)    
$ weakened -0.0063 versus £ (-0.51%) at 1.2459 ($: YTD: 2.25%; 5YR: 22.4%)    
¥ weakened -0.0800 versus $ (-0.07%) at 107.9800 (¥: YTD: -1.56%; 5YR: -0.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.69 (+1.16%) at 60.08 (YTD: 13.00%; 5YR: -33.0%)    
WTI Crude ($/bbl) up +0.96 (+1.83%) at 53.55 (YTD: 17.93%; 5YR: -37.6%)    
Gold ($/ozt) up +5.68 (+0.38%) at 1499.74 (YTD: 16.94%; 5YR: 22.6%)    
Copper ($/mt) up +97.00 (+1.71%) at 5781.00 (YTD: -3.08%; 5YR: -13.0%)    
    
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