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5 September 2019

05/09/2019

Market Data and Morning Chat

Morning Chat 

The division bell: Boris Johnson suffered more defeats last night as the Conservatives, Labour and Lib-Dems remain poles apart. Johnson’s plan – as he presented it – was to maintain a no-deal Brexit threat with high hopes of getting a deal from Europe.   Instead, Hilary Benn’s bill was passed 327 to 299.   Boris responded by proposing an October 15 election. He had the most votes – 298 to 56, but needed 434 to win.  Marooned by the vote, it raises the question where next. MPs will keep talking, possibly May’s deal will be coming back to life, and the pound rallied to $1.22.

But hey, the Americans were upbeat: The US equity markets rallied 1-1.5% yesterday led by energy stocks like Southwestern (+7.9%) and Chesapeake (+6.5%). An improved Chinese services PMI provoked, crudely, a 5% rally in oil prices which in turn led to the gush in oil stocks.  Gains were tempered a bit by a surprise build in oil inventories, but they mostly stuck. Moreover, there was some optimism over the situation in Hong Kong as Carrie Lam stated she will formally withdraw the extradition bill, the slightly disappointing imports numbers were only modestly so and the improved exports were as expected.

More to metal than gold & silver:  Current economic concerns and the continued global bond yield declines have helped gold shine this year as it’s reached a more-than-five-year high. Silver has also rallied.  That should be it if growth is slowing. However, nickel has been gaining more than ¢5 here and there as an Indonesian export ban has pushed prices more than gold. Iron ore has also beaten gold though thanks to now-easing supply outages. More interesting however is the more-than-doubling of rhodium prices as it is principally used in catalytic converters. Maybe automakers are getting back on the road. 

Chancellor Savid Javid’s first spending review offers £13.8 billion in increased public spending
Hurricane Dorian is dithering as much as the politicians as closes on US eastern seaboard.
Prudential(+3.6%) and Standard Chartered (+3.0%) rally on withdrawal of Hong Kong bill.
Starbucks (-0.7%) earnings slip as the Trump tax cut benefits near the bottom of the cup. 
Apple (+1.7%) plans to issue $7billion in debt as it finds the low rates are a pip 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +12.09 (+0.97%) at 1,253 (YTD: 15.61%; 5YR: 45.5%)
MSCI AC World Equities (USD) up +96.68 (+1.08%) at 9,036 (YTD: 16.26%; 5YR: 39.2%)
Barclays Global Aggregate Bonds up +0.61 (+0.12%) at 515 (YTD: 7.61%; 5YR: 9.7%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 up +31.51 (+1.08%) at 2,938 (YTD: 17.19%; 5YR: 46.3%)    
NASDAQ up +102.72 (+1.30%) at 7,977 (YTD: 20.22%; 5YR: 74.1%)    
Euro STOXX 50 up +30.09 (+0.88%) at 3,451 (YTD: 14.97%; 5YR: 5.4%)    
FTSE 100 up +43.07 (+0.59%) at 7,311 (YTD: 8.67%; 5YR: 6.7%)    
CAC up +66.00 (+1.21%) at 5,532 (YTD: 16.94%; 5YR: 23.3%)    
DAX up +114.18 (+0.96%) at 12,025 (YTD: 13.88%; 5YR: 23.4%)    
Nikkei 225  up +436.80 (+2.12%) at 21,086 (YTD: 5.35%; 5YR: 34.6%)    
Hang Seng down -172.30 (-0.65%) at 26,351 (YTD: 1.95%; 5YR: 4.4%)    
MSCI Emerging Markets up +17.33 (+1.78%) at 991 (YTD: 2.57%; 5YR: -9.7%)    
    
Selected Government Bond Yields    
US 2 Year up +0.04 at 1.48 (began the year at 2.49; 5 years ago it was 0.51)    
US 10 Year up +0.04 at 1.50 (began the year at 2.68; 5 years ago it was 2.46)    
UK 10 Year up +0.09 at 0.49 (began the year at 1.28; 5 years ago it was 2.46)    
Germany 10 Year up +0.02 at -0.66 (began the year at 0.24; 5 years ago it was 0.93)    
France 10 Year up +0.01 at -0.36 (began the year at 0.70; 5 years ago it was 1.26)    
Italy 10 Year up +0.01 at 0.82 (began the year at 2.74; 5 years ago it was 2.25)    
Japan 10 Year up +0.01 at -0.27 (began the year at -0.01; 5 years ago it was 0.54)    
Barclays EM Basket up +0.00 at 5.49 (began the year at 6.22; 5 years ago it was 5.27)
    
Selected Currencies    
$ strengthened +0.0001 versus € (+0.01%) at 1.1025 ($: YTD: 3.73%; 5YR: 14.9%)    
€ weakened -0.0014 versus £ (+0.13%) at 1.1086 (€: YTD: 0.40%; 5YR: 13.6%)    
$ weakened -0.0013 versus £ (-0.11%) at 1.2221 ($: YTD: 4.12%; 5YR: 25.1%)    
¥ weakened -0.1800 versus $ (-0.17%) at 106.4800 (¥: YTD: -2.99%; 5YR: -1.3%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.08 (+0.13%) at 60.77 (YTD: 14.29%; 5YR: -39.3%)    
WTI Crude ($/bbl) up +2.32 (+4.30%) at 56.26 (YTD: 23.89%; 5YR: -40.4%)    
Gold ($/ozt) down -7.50 (-0.48%) at 1544.92 (YTD: 20.47%; 5YR: 21.8%)    
Copper ($/mt) up +138.00 (+2.46%) at 5748.00 (YTD: -3.64%; 5YR: -17.1%)    
    
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