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14 October 2019

14/10/2019

Market Data and Morning Chat

Morning Chat 

Blink and you missed it: UK equities had a decent Friday with the larger market capitalisation (large cap) indices rising ¾ to 1¼% and small caps index rising over 4%! However, the averages do nothing to illustrate the market shift.  At one end, Lloyds Bank (+12.3%), house builders (+9 to 11% or so), and domestic retailers & travel companies (+8 to 11½%) made the running, while at the other international-earners like British American Tobacco (-3.6%), Diageo (-3.4%), & Unilever (-2.8%) faltered. Why? The optimistic belief in a Brexit breakthrough when Irish PM Leo Varadkar saw a pathway to a deal.

Dealing everywhere you look: Of course you don’t think Donald Trump would be upstaged by Brexit news. He announced a “very substantial phase one deal” agreed between China and the US in their trade discussions. As part of the agreement, US tariffs due to go into effect Tuesday won’t while China agreed to ramp up purchases of US agricultural products.  Steve Mnuchin noted there was more work to do, but that much progress had been made and more, the US would even revisit the “currency-manipulator” charge levied against China. All good enough to send US equities up 1 to 1¾%.

So what could we discover after Columbus Day? Canada will be celebrating Thanksgiving and US bond traders get a day off today, but Columbus Day sees equity traders hard at work. They’ll be looking to US retail sales later this week – expected to rise again – alongside the Empire manufacturing survey.  Here in the UK, we’ll see if employment rises and the unemployment rate drops to 3.7%.  We’ll also get wage gains – expected at 3.7% - inflation and retail sales numbers.  China’s Q3 GDP data could be telling, as could German economic sentiment and the start of the Q3 earnings season.

The IMF also meets this week amid hints their forecasts for global growth could be trimmed
The pound’s slipped back a little on a tempering of enthusiasm after such a strong gain last week
China’s trade numbers were weaker than hoped – exports fell 0.7% with imports down 6.2%...
… still, Asian markets are up around 1% at the moment on the trade optimism.

Market Data

     
Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +14.97 (+1.19%) at 1,273 (YTD: 17.53%; 5YR: 58.6%)
MSCI AC World Equities (USD) up +123.64 (+1.36%) at 9,185 (YTD: 18.19%; 5YR: 53.4%)
Barclays Global Aggregate Bonds down -0.98 (-0.19%) at 509 (YTD: 6.23%; 5YR: 8.9%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +32.14 (+1.09%) at 2,970 (YTD: 18.49%; 5YR: 58.2%)    
NASDAQ up +106.26 (+1.34%) at 8,057 (YTD: 21.43%; 5YR: 90.6%)    
Euro STOXX 50 up +75.96 (+2.17%) at 3,570 (YTD: 18.94%; 5YR: 19.0%)    
FTSE 100 up +60.72 (+0.84%) at 7,247 (YTD: 7.71%; 5YR: 13.4%)    
CAC up +96.43 (+1.73%) at 5,665 (YTD: 19.76%; 5YR: 38.6%)    
DAX up +347.45 (+2.86%) at 12,512 (YTD: 18.49%; 5YR: 41.8%)    
Nikkei 225  up +246.89 (+1.15%) at 21,799 (YTD: 8.91%; 5YR: 45.9%)    
Hang Seng up +220.46 (+0.84%) at 26,529 (YTD: 2.64%; 5YR: 15.1%)    
MSCI Emerging Markets up +15.04 (+1.51%) at 1,012 (YTD: 4.74%; 5YR: 2.0%)    
    
Selected Government Bond Yields    
US 2 Year unchanged at 1.59 (began the year at 2.49; 5 years ago it was 0.37)    
US 10 Year unchanged at 1.73 (began the year at 2.68; 5 years ago it was 2.20)    
UK 10 Year up +0.12 at 0.71 (began the year at 1.28; 5 years ago it was 2.13)    
Germany 10 Year down -0.03 at -0.47 (began the year at 0.24; 5 years ago it was 0.84)    
France 10 Year down -0.03 at -0.16 (began the year at 0.70; 5 years ago it was 1.20)    
Italy 10 Year down -0.03 at 0.91 (began the year at 2.74; 5 years ago it was 2.30)    
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 +0.02 at 5.44 (began the year at 6.22; 5 years ago it was 5.24)
    
Selected Currencies    
$ strengthened +0.0023 versus € (+0.21%) at 1.1028 ($: YTD: 3.70%; 5YR: 12.9%)    
€ strengthened +0.0055 versus £ (-0.48%) at 1.1406 (€: YTD: -2.42%; 5YR: 10.3%)    
$ strengthened +0.0089 versus £ (+0.70%) at 1.2578 ($: YTD: 1.32%; 5YR: 21.0%)    
¥ strengthened +0.1300 versus $ (+0.12%) at 108.2700 (¥: YTD: -1.28%; 5YR: -1.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.74 (-1.22%) at 59.75 (YTD: 12.38%; 5YR: -29.8%)    
WTI Crude ($/bbl) up +1.15 (+2.15%) at 54.70 (YTD: 20.46%; 5YR: -36.3%)    
Gold ($/ozt) down -0.55 (-0.04%) at 1488.55 (YTD: 16.07%; 5YR: 20.7%)    
Copper ($/mt) up +15.00 (+0.26%) at 5796.00 (YTD: -2.83%; 5YR: -12.8%)    
    
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