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9 September 2019

09/09/2019

Market Data and Morning Chat

Morning Chat 

Green again: Last Tuesday, BBC Parliament’s single-day audience hit 1.5million and was the only BBC channel increasing viewers, which pretty much tells you where everyone’s interest lay. So you may not have noticed that PMI data was pretty much as expected, the Italians formed a new government so avoiding another trip to the polls and the US rattled off better-than-expected ADP employment and ISM PMI data. Oh, and the Chinese signalled trade talks will restart in October. On the whole, the news was positive for the equity markets up 1-3% or so, and prompted a small rise in bond yields.

That’s two, try for three? Two positive weeks for equities have started to improve sentiment, although US non-farm payrolls on Friday, a bit light at 130,000 versus 159,000 expected, were underwhelming. Let’s hope this week’s data sets can keep the upbeat trend going. Today’s UK monthly GDP – expected at +0.1% - could go either way based on lead indicators, especially with the industrial and manufacturing production numbers expected to fall. Maybe the US job openings and UK employment data might help. We’ll also see European (and non-German) industrial output data which has been ok. Oh, and maybe more ECB stimulus.

Take-away from the Chinese: The well-taken news that China’s top negotiator would head to the US in October might not be so surprising when you look at the latest trade data.  Chinese imports were down 5.6% – pretty much as expected – as refined products & fuel oil imports dropped 22.7% and 28.3% respectively and other raw imports, like copper and rubber, also slipped. Exports also fell, but they weren’t expected to. The 16% decline in exports to the US were telling. Less inputs, lower US sales and tariff increases might answer why the Chinese are coming back to the table. 

…China also cut the level of reserves banks have to hold to boost lending and the economy.
… and equity futures show gains as Asia generally trades up today
BA’s parent International Airlines Group (-0.4%) loses a little altitude as pilot go on strike

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +2.22 (+0.17%) at 1,269 (YTD: 17.13%; 5YR: 48.3%)
MSCI AC World Equities (USD) up +19.83 (+0.22%) at 9,161 (YTD: 17.88%; 5YR: 42.5%)
Barclays Global Aggregate Bonds up +1.09 (+0.21%) at 514 (YTD: 7.26%; 5YR: 10.1%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +2.71 (+0.09%) at 2,979 (YTD: 18.82%; 5YR: 49.8%)    
NASDAQ down -13.75 (-0.17%) at 8,103 (YTD: 22.12%; 5YR: 78.0%)    
Euro STOXX 50 up +10.49 (+0.30%) at 3,495 (YTD: 16.45%; 5YR: 7.7%)    
FTSE 100 up +11.17 (+0.15%) at 7,282 (YTD: 8.24%; 5YR: 6.6%)    
CAC up +10.62 (+0.19%) at 5,604 (YTD: 18.46%; 5YR: 25.9%)    
DAX up +64.95 (+0.54%) at 12,192 (YTD: 15.46%; 5YR: 25.5%)    
Nikkei 225  up +118.85 (+0.56%) at 21,318 (YTD: 6.51%; 5YR: 35.4%)    
Hang Seng down -19.63 (-0.07%) at 26,671 (YTD: 3.19%; 5YR: 5.9%)    
MSCI Emerging Markets up +4.95 (+0.49%) at 1,008 (YTD: 4.37%; 5YR: -7.3%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.53 (began the year at 2.49; 5 years ago it was 0.56)    
US 10 Year up +0.00 at 1.56 (began the year at 2.68; 5 years ago it was 2.50)    
UK 10 Year down -0.09 at 0.51 (began the year at 1.28; 5 years ago it was 2.48)    
Germany 10 Year up +0.00 at -0.64 (began the year at 0.24; 5 years ago it was 1.00)    
France 10 Year up +0.00 at -0.34 (began the year at 0.70; 5 years ago it was 1.35)    
Italy 10 Year up +0.01 at 0.89 (began the year at 2.74; 5 years ago it was 2.37)    
Japan 10 Year down -0.01 at -0.26 (began the year at -0.01; 5 years ago it was 0.53)    
Barclays EM Basket up +0.02 at 5.51 (began the year at 6.22; 5 years ago it was 5.31)
    
Selected Currencies    
$ strengthened +0.0009 versus € (+0.08%) at 1.1026 ($: YTD: 3.72%; 5YR: 14.6%)    
€ strengthened +0.0013 versus £ (-0.12%) at 1.1123 (€: YTD: 0.06%; 5YR: 12.0%)    
$ strengthened +0.0024 versus £ (+0.20%) at 1.2265 ($: YTD: 3.77%; 5YR: 23.8%)    
¥ weakened -0.0600 versus $ (-0.06%) at 106.9100 (¥: YTD: -2.57%; 5YR: -0.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.37 (+0.60%) at 62.52 (YTD: 17.59%; 5YR: -36.6%)    
WTI Crude ($/bbl) up +0.22 (+0.39%) at 56.52 (YTD: 24.47%; 5YR: -39.4%)    
Gold ($/ozt) up +2.39 (+0.16%) at 1509.11 (YTD: 17.67%; 5YR: 20.2%)    
Copper ($/mt) down -12.00 (-0.21%) at 5833.00 (YTD: -2.21%; 5YR: -16.4%)    
    
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