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25 September 2019

25/09/2019

Market Data and Morning Chat

Morning Chat 

Bad day in the Halls of Power: The UK Supreme Court unanimously held Boris Johnson gave the Queen unlawful advice triggering an unlawful proroguing of Parliament.  The Court then quashed the proroguing and ordered Speaker John Bercow to decide the next sitting. The effect? Sterling rallied ½% higher immediately against the dollar. Meanwhile, Nancy Pelosi told House of Representatives committee leaders to compile arguments for impeaching Donald Trump over his allegedly withholding aid to the Ukraine to pressure the Ukrainians to investigate Joe Biden. US stocks tumbled, though recovered when Trump said he’d publish the full transcript of the call.

Maybe diesel surprise you: UK and US leadership weren’t the only ones getting grief.  German auto-manufacturers were likely driven to despair when German prosecutors laid criminal charges against VW (-2.2%) CEO Herbert Diess, Chairman Hans Dieter Poetsch and ex-CEO Winterkorn for stock market manipulation for delay in telling investors about the emissions scandal and trying to settle with the US without disclosing all relevant information.  Three hours later, more German prosecutors (busy guys) fined Mercedes-Benz maker Daimler (-1.7%) £770million for breaking diesel emission regulations. The scandal has cut two-fifths from VW’s value and seriously dented the German auto sector outlook.

But a bit of cheer: Depending on your view, the ruling against Boris Johnson and the potential impeachment proceedings against Donald Trump may already have you dancing the aisles or fuming.  But the events did hide some good news. Europe saw the release of the French business confidence and German business climate surveys.  Both beat expectations, with the former scoring 102 versus 101 expected, the latter 94.6 versus 94.4 expected (and 94.3 previously) on a strong improvement in current conditions.  Then here in the UK, public sector net borrowing data showed the budget deficit narrowed more than expected. All helps.

Given the legal wrangling, equity futures are down in Europe & Asia, up in the US. In other courts
Starbucks won their tax case against the EU competition ruling – which could help Apple
Google also won their case against the EU – you can only be forgotten in Europe, not world-wide
Tui added another 6.5% (14.2% in two days) over the Thomas Cook collapse
Nike (+5.2% afterhours) trotted off a great set of earnings with China sales up 27% and US +4% 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -6.89 (-0.54%) at 1,273 (YTD: 17.51%; 5YR: 51.0%)
MSCI AC World Equities (USD) down -48.59 (-0.53%) at 9,180 (YTD: 18.13%; 5YR: 45.2%)
Barclays Global Aggregate Bonds up +1.15 (+0.23%) at 512 (YTD: 6.88%; 5YR: 10.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -25.18 (-0.84%) at 2,967 (YTD: 18.34%; 5YR: 50.9%)    
NASDAQ down -118.84 (-1.46%) at 7,994 (YTD: 20.47%; 5YR: 79.0%)    
Euro STOXX 50 down -4.92 (-0.14%) at 3,532 (YTD: 17.68%; 5YR: 10.3%)    
FTSE 100 down -34.65 (-0.47%) at 7,291 (YTD: 8.37%; 5YR: 9.8%)    
CAC down -2.43 (-0.04%) at 5,628 (YTD: 18.97%; 5YR: 29.2%)    
DAX down -35.18 (-0.29%) at 12,307 (YTD: 16.56%; 5YR: 29.4%)    
Nikkei 225  down -78.69 (-0.36%) at 22,020 (YTD: 10.02%; 5YR: 34.5%)    
Hang Seng down -338.08 (-1.29%) at 25,943 (YTD: 0.38%; 5YR: 9.2%)    
MSCI Emerging Markets down -3.88 (-0.38%) at 1,011 (YTD: 4.72%; 5YR: -1.4%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.61 (began the year at 2.49; 5 years ago it was 0.55)    
US 10 Year up +0.00 at 1.65 (began the year at 2.68; 5 years ago it was 2.50)    
UK 10 Year down -0.02 at 0.53 (began the year at 1.28; 5 years ago it was 2.45)    
Germany 10 Year down -0.01 at -0.61 (began the year at 0.24; 5 years ago it was 0.97)    
France 10 Year down -0.01 at -0.31 (began the year at 0.70; 5 years ago it was 1.32)    
Italy 10 Year up +0.01 at 0.84 (began the year at 2.74; 5 years ago it was 2.36)    
Japan 10 Year down -0.02 at -0.27 (began the year at -0.01; 5 years ago it was 0.52)    
Barclays EM Basket up +0.00 at 5.54 (began the year at 6.22; 5 years ago it was 5.33)
    
Selected Currencies    
$ strengthened +0.0016 versus € (+0.15%) at 1.0998 ($: YTD: 3.96%; 5YR: 13.7%)    
€ strengthened +0.0004 versus £ (-0.04%) at 1.1334 (€: YTD: -1.80%; 5YR: 12.9%)    
$ strengthened +0.0023 versus £ (+0.18%) at 1.2465 ($: YTD: 2.20%; 5YR: 23.5%)    
¥ weakened -0.2200 versus $ (-0.21%) at 107.3100 (¥: YTD: -2.19%; 5YR: 1.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.07 (+0.11%) at 62.06 (YTD: 16.72%; 5YR: -34.9%)    
WTI Crude ($/bbl) down -1.32 (-2.26%) at 57.17 (YTD: 25.90%; 5YR: -39.2%)    
Gold ($/ozt) down -2.07 (-0.13%) at 1529.85 (YTD: 19.29%; 5YR: 25.2%)    
Copper ($/mt) up +2.00 (+0.03%) at 5780.00 (YTD: -3.10%; 5YR: -14.3%)    
    
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