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6 September 2019

06/09/2019

Market Data and Morning Chat

Morning Chat 

Damn the fellow! He’s a mere pounder after all: Wellington’s curse of Napoleon at Waterloo. Many may think Boris Johnson has met his Waterloo already. The Lords Conservatives conceded the passing of Benn’s bill; it should complete passage today. Boris didn’t get his October 15thelection – at least yet – and Boris’ brother Jo resigned. Not a good start. Consequentially, the pound, er, rallied to $1.23 as the no-deal probability diminished and UK equities slipped by ¾% (about the only index to fall). Yet Jacob Rees-Mogg noted that next week’s Parliamentary business will include another attempt to go to the polls.

But yet again, Americans were upbeat: Purchasing manager surveys are always popular investor sentiment drivers and the Institute of Supply Management non-manufacturing PMI is a favorite. The headline number was 56.4 – solidly above 50 and notably better than the 54 expected. Moreover, business activity grew at the fastest pace since 2008. Then add that the ADP August employment change was 195,000 – perceptibly well ahead of the 145,000 expected (although the survey variance is high) – and the initial jobless claims change was minimal. All good enough to boost US equities by 1½ to 2¼% and lift the 10-year bond yield 0.11%.

…Oh, and tech stocks did well too: The US-China trade talks haven’t been mentioned much lately, but when China’s Commerce Ministry announced that Liu He – their senior trade negotiator – will be heading to Washington in early October to resume trade discussions there was definitely a positive buzz. After recent introductions of further tariffs, hopes for an imminent resolution faded.  However, a well-connected Chinese commentator appears positive and the shares of the likes of Apple, Microsoft, Alphabet and Facebook were all stronger than the market while the Tech sector was up 2.1%. Now, presumably, we’ll have to see what Trump tweets!

Asia trading well today with ZTE (around 9% so far) leaping on Italy’s move on 5G roll-out
Gold (-2.5%) was tarnished as the resumption of trade talks lifted growth expectations
Boeing shares hit slight turbulence as the EU said it won’t accept the FAA sign-off of the 737Max
Melrose (+6.8%) tops UK market as results better than anticipated and GKN merger in gear
It doesn’t pay to be rich at Goldman Sachs amid planned cull of highest paid employees

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +14.27 (+1.14%) at 1,267 (YTD: 16.93%; 5YR: 47.2%)
MSCI AC World Equities (USD) up +105.57 (+1.17%) at 9,141 (YTD: 17.62%; 5YR: 40.8%)
Barclays Global Aggregate Bonds down -2.78 (-0.54%) at 513 (YTD: 7.03%; 5YR: 9.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +38.22 (+1.30%) at 2,976 (YTD: 18.71%; 5YR: 48.2%)
NASDAQ up +139.95 (+1.75%) at 8,117 (YTD: 22.33%; 5YR: 77.1%)
Euro STOXX 50 up +33.87 (+0.98%) at 3,485 (YTD: 16.10%; 5YR: 6.4%)
FTSE 100 down -40.09 (-0.55%) at 7,271 (YTD: 8.07%; 5YR: 6.1%)
CAC up +61.30 (+1.11%) at 5,593 (YTD: 18.24%; 5YR: 24.7%)
DAX up +101.74 (+0.85%) at 12,127 (YTD: 14.85%; 5YR: 24.4%)
Nikkei 225  up +113.63 (+0.54%) at 21,200 (YTD: 5.92%; 5YR: 35.3%)
Hang Seng up +67.94 (+0.26%) at 26,583 (YTD: 2.85%; 5YR: 5.3%)
MSCI Emerging Markets up +12.40 (+1.25%) at 1,003 (YTD: 3.86%; 5YR: -8.6%)

Selected Government Bond Yields
US 2 Year up +0.01 at 1.54 (began the year at 2.49; 5 years ago it was 0.00)
US 10 Year up +0.02 at 1.58 (began the year at 2.68; 5 years ago it was 0.00)
UK 10 Year up +0.11 at 0.60 (began the year at 1.28; 5 years ago it was 0.00)
Germany 10 Year up +0.00 at -0.59 (began the year at 0.24; 5 years ago it was 0.00)
France 10 Year up +0.00 at -0.29 (began the year at 0.70; 5 years ago it was 0.00)
Italy 10 Year down -0.02 at 0.93 (began the year at 2.74; 5 years ago it was 0.00)
Japan 10 Year up +0.02 at -0.25 (began the year at -0.01; 5 years ago it was 0.00)
Barclays EM Basket up +0.01 at 5.50 (began the year at 6.22; 5 years ago it was 0.00)

Selected Currencies
$ unchanged 0.0000 versus € (0.00%) at 1.1041 ($: YTD: 3.59%; 5YR: 14.7%)
€ weakened -0.0018 versus £ (+0.16%) at 1.1172 (€: YTD: -0.38%; 5YR: 12.7%)
$ weakened -0.0022 versus £ (-0.18%) at 1.2338 ($: YTD: 3.20%; 5YR: 24.3%)
¥ weakened -0.0700 versus $ (-0.07%) at 107.0100 (¥: YTD: -2.48%; 5YR: -1.8%)

Selected Commodities
Brent Crude ($/bbl) up +0.16 (+0.26%) at 61.40 (YTD: 15.48%; 5YR: -38.7%)
WTI Crude ($/bbl) up +0.04 (+0.07%) at 56.30 (YTD: 23.98%; 5YR: -39.7%)
Gold ($/ozt) down -4.06 (-0.27%) at 1514.92 (YTD: 18.13%; 5YR: 19.4%)
Copper ($/mt) up +97.00 (+1.69%) at 5845.00 (YTD: -2.01%; 5YR: -16.2%)

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