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16 October 2019

16/10/2019

Market Data and Morning Chat

Morning Chat 

A little more conversation, a little more action, please: Not exactly Elvis but sterling certainly rattled up, gaining 1¼% against both the dollar & euro and garnering substantial gains against most major currencies. The trigger was EU negotiator Michel Barnier giving a midnight deadline to agree the details of a Brexit agreement so it could be ready in time for the Brussels summit on Thursday, yet with both sides suggesting that, although difficult, a deal could be done. Well, they were still talking by the deadline and the DUP said further work was needed. Talks will resume in Brussels today.

Has Varadkar blinked? Many might wonder what Boris Johnson said to Irish Taoseach Leo Varadkar to get him softening his Backstop stance. We may never know, but Irish polling gives a clue. Before the 2016 election, Varadkar’s Fine Gael party led by 10%. Then David Cameron announced the referendum and Varadkar’s polling collapsed. His minority government needed a confidence and supply agreement with Fianna Fail and Fianna have led in the polls.  Pushing the backstop helped Varadkar’s numbers improve – until Boris became PM. Now, a no-deal outcome would be a disaster for Leo and only a deal avoids the problem.

Something to bank on: US equities posted another solid day, rising ¾ to 1¼% after a string of decent earnings announcements. JP Morgan (+3.0%) banked record revenues on solid home and auto loans. Wells Fargo (+1.7%), Citigroup (+1.4%) and Goldman’s (+0.3%) were also up even though their numbers were not as strong. United Health (+8.2%) has the right prescription for investors with better-than-expected profits and improved guidance. Fellow health name Johnson & Johnson (+1.6%) was also on the right drugs as their cancer and other prescription treatments boosted revenues and earnings over estimates. Now for Netflix and Bank of America.

UK unemployment edged up to 3.9% as weekly earnings slipped to 3.8% (versus 4.0% expected)
Violence sparked across Catalonia in response to nationalist’s harsh sentencing
Democrats hold off on an official authorising vote for the impeachment process for now
… as last night’s debate saw Elizabeth Warren suffer the attacks of a front runner, however...
… Democrats & Republicans can agree to cheer the Washington Nationals on the verge of finals

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +10.77 (+0.85%) at 1,283 (YTD: 18.45%; 5YR: 62.2%)
MSCI AC World Equities (USD) up +89.95 (+0.98%) at 9,258 (YTD: 19.13%; 5YR: 56.4%)
Barclays Global Aggregate Bonds down -0.32 (-0.06%) at 509 (YTD: 6.20%; 5YR: 8.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +29.53 (+1.00%) at 2,996 (YTD: 19.50%; 5YR: 60.8%)    
NASDAQ up +100.06 (+1.24%) at 8,149 (YTD: 22.81%; 5YR: 93.2%)    
Euro STOXX 50 up +42.39 (+1.19%) at 3,599 (YTD: 19.90%; 5YR: 25.2%)    
FTSE 100 down -1.81 (-0.03%) at 7,212 (YTD: 7.19%; 5YR: 16.4%)    
CAC up +58.97 (+1.04%) at 5,702 (YTD: 20.53%; 5YR: 45.5%)    
DAX up +143.23 (+1.15%) at 12,630 (YTD: 19.61%; 5YR: 47.2%)    
Nikkei 225  up +265.71 (+1.20%) at 22,473 (YTD: 12.28%; 5YR: 52.5%)    
Hang Seng up +109.56 (+0.41%) at 26,613 (YTD: 2.97%; 5YR: 16.2%)    
MSCI Emerging Markets up +1.80 (+0.18%) at 1,019 (YTD: 5.54%; 5YR: 5.0%)    
    
Selected Government Bond Yields    
US 2 Year down -0.03 at 1.59 (began the year at 2.49; 5 years ago it was 0.34)    
US 10 Year down -0.02 at 1.75 (began the year at 2.68; 5 years ago it was 2.16)    
UK 10 Year up +0.06 at 0.69 (began the year at 1.28; 5 years ago it was 2.10)    
Germany 10 Year up +0.01 at -0.40 (began the year at 0.24; 5 years ago it was 0.82)    
France 10 Year up +0.01 at -0.11 (began the year at 0.70; 5 years ago it was 1.26)    
Italy 10 Year down 0.00 at 0.93 (began the year at 2.74; 5 years ago it was 2.58)    
Japan 10 Year up +0.01 at -0.16 (began the year at -0.01; 5 years ago it was 0.48)    
Barclays EM Basket up +0.00 at 5.46 (began the year at 6.22; 5 years ago it was 5.24)
    
Selected Currencies    
$ weakened -0.0026 versus € (-0.24%) at 1.1049 ($: YTD: 3.52%; 5YR: 13.8%)    
€ strengthened +0.0011 versus £ (-0.10%) at 1.1562 (€: YTD: -3.74%; 5YR: 8.3%)    
$ weakened -0.0020 versus £ (-0.16%) at 1.2776 ($: YTD: -0.24%; 5YR: 20.5%)    
¥ strengthened +0.1300 versus $ (+0.12%) at 108.7300 (¥: YTD: -0.86%; 5YR: -2.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.10 (+0.17%) at 58.49 (YTD: 10.01%; 5YR: -32.2%)    
WTI Crude ($/bbl) down -0.78 (-1.46%) at 52.81 (YTD: 16.30%; 5YR: -35.4%)    
Gold ($/ozt) down -1.89 (-0.13%) at 1479.18 (YTD: 15.34%; 5YR: 19.4%)    
Copper ($/mt) down -45.00 (-0.77%) at 5773.00 (YTD: -3.22%; 5YR: -13.1%)    
    
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