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3 September 2019

03/09/2019

Market Data and Morning Chat

Morning Chat 

Rumours: Maybe it’s second hand news, but sterling slipped another 0.8% on the evolving Brexit situation. Remainers’ dreams of passing legislation ensuring Boris Johnson is never going back again to Brussels with a no-deal threat was met with government cajoling. Backbench plotters were warned if they don’t stop they could face deselection amid an implied snap general election on October 14. To this, Tony Blair warned Labour members to beware of the Conservatives elephant trap and to go your own way as Boris will look to chain fears of a Corbyn government to the vote and win an overall majority.

But that’s not all folks: Markit’s manufacturing PMI surveys for the major European economies – while mostly as expected – still indicated a negative tone to the economic outlook (only the French data was expansionary). It resulted in the Euro weakening to a 2¼-year low to the dollar but the Euro weaker did allow equities to hold in positive territory - just. This side of the channel, the UK’s Markit PMI data, while disappointingly low, was offset by the weaker pound allowing the UK equity market to rally 1% even amid the political shenanigans. Hopefully today’s UK Construction PMI will be better.

So what about the US and these tariffs? It was US Labor Day yesterday, so the only signals we saw about the direction of the markets came from the futures market.  Initially flashing green, they slid to red as the day wore on, and they’re red now though improving.  The initial move to green following the imposition of 15% tariffs on various Chinese goods from diapers to watches to TVs was actually pretty optimistic.  The slide to red came more as the European manufacturing data came out while better-than-expected South Korean GDP helped as does today’s optimistic start in Europe.

AstraZeneca (+2.9%) experienced an all-time high yesterday with new drugs Brilinta and Farxiga
Italy’s Lega Nord leader Salvini may end up seeing stars in a 5-Star / Democratic party coalition

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +0.43 (+0.03%) at 1,247 (YTD: 15.12%; 5YR: 45.2%)
MSCI AC World Equities (USD) down -7.90 (-0.09%) at 8,979 (YTD: 15.53%; 5YR: 38.2%)
Barclays Global Aggregate Bonds down -0.90 (-0.18%) at 514 (YTD: 7.23%; 5YR: 8.9%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +1.88 (+0.06%) at 2,926 (YTD: 16.74%; 5YR: 46.2%)    
NASDAQ down -10.51 (-0.13%) at 7,963 (YTD: 20.01%; 5YR: 73.2%)    
Euro STOXX 50 up +5.78 (+0.17%) at 3,433 (YTD: 14.36%; 5YR: 6.6%)    
FTSE 100 up +74.76 (+1.04%) at 7,282 (YTD: 8.23%; 5YR: 5.9%)    
CAC up +12.56 (+0.23%) at 5,493 (YTD: 16.11%; 5YR: 24.2%)    
DAX up +14.50 (+0.12%) at 11,954 (YTD: 13.21%; 5YR: 24.2%)    
Nikkei 225  up +4.97 (+0.02%) at 20,625 (YTD: 3.05%; 5YR: 31.1%)    
Hang Seng down -43.26 (-0.17%) at 25,583 (YTD: -1.02%; 5YR: 1.0%)    
MSCI Emerging Markets down -0.57 (-0.06%) at 984 (YTD: 1.86%; 5YR: -10.6%)    
    
Selected Government Bond Yields    
US 10 Year up +0.02 at 1.52 (began the year at 2.68; 5 years ago it was 2.40)    
US 2 Year up +0.01 at 1.51 (began the year at 2.49; 5 years ago it was 0.52)    
UK 10 Year down -0.06 at 0.42 (began the year at 1.28; 5 years ago it was 2.47)    
Germany 10 Year up +0.00 at -0.70 (began the year at 0.24; 5 years ago it was 0.95)    
France 10 Year up +0.00 at -0.40 (began the year at 0.70; 5 years ago it was 1.33)    
Italy 10 Year down -0.02 at 0.94 (began the year at 2.74; 5 years ago it was 2.46)    
Japan 10 Year down 0.00 at -0.28 (began the year at -0.01; 5 years ago it was 0.53)    
Barclays EM Basket up +0.02 at 5.46 (began the year at 6.22; 5 years ago it was 5.27)
    
Selected Currencies    
$ strengthened +0.0031 versus € (+0.28%) at 1.0943 ($: YTD: 4.44%; 5YR: 16.7%)    
€ strengthened +0.0028 versus £ (-0.26%) at 1.0975 (€: YTD: 1.41%; 5YR: 14.1%)    
$ strengthened +0.0068 versus £ (+0.56%) at 1.2009 ($: YTD: 5.78%; 5YR: 27.0%)    
¥ weakened -0.1400 versus $ (-0.13%) at 106.2800 (¥: YTD: -3.18%; 5YR: -1.3%)    
    
Selected Commodities    
Brent Crude ($/bbl) unchanged 0.00 (0.00%) at 58.89 (YTD: 10.76%; 5YR: -41.9%)    
WTI Crude ($/bbl) down -1.61 (-2.84%) at 55.10 (YTD: 21.34%; 5YR: -42.6%)    
Gold ($/ozt) down -3.62 (-0.24%) at 1525.78 (YTD: 18.97%; 5YR: 20.2%)    
Copper ($/mt) down -32.00 (-0.57%) at 5620.00 (YTD: -5.78%; 5YR: -19.3%)    
    
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