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12 September 2019

12/09/2019

Market Data and Morning Chat

Morning Chat 

…and there’s the tweet: If the Fed do cut rates next week, you knowPresident Donald Trump is going to acknowledge his part in getting the big, beautiful cut done. By tweet, he’s urging the Fed to cut rates to “zero, or less” – possibly a step, or eight, too far. However, couple the excitement of an anticipated Fed rate cut with the hotly anticipated stimulus from the European Central Bank later today and news the Chinese are exempting the 25% tariffs on items like alfalfa, drugs and fish meal, and you can see a case for building enthusiasm for equities. 

To sit or not to sit: Parliament’s prorogued, the MP’s sent home, the government, of course, productively using the time preparing for the Queen’s speech. Except the Scottish Court of Session judges ruled the prorogation illegal, or at least it was done so in this case “if its purpose was to stymie parliamentary scrutiny of the executive.” Stymie is such a lovely Scottish golfing term derived from a “person who sees poorly”, but the judges believe they can see that avoiding Brexit scrutiny was “true reason for the prorogation”, adding to Johnson’s handicaps. Bring on the appeal to Supreme Court.

Gilty pleasure: Gold had a positive day, rising 0.77% in dollar (or sterling-hedged) terms after selling off since the 4thfrom its year-to-date $1,557.31 high (or £1,281.72 on the 3rd).  On the negative side of the ledger, the possibility of a US-China trade deal. If tensions evaporate, then so too perceptions of stagnating growth and the reason for many to hold gold.  However, on the positive side, there’s the expectation of continuing and further stimulus from central banks.  Yesterday’s rally is looking to nearer-term stimulus rather than the possible cry wolf (or is that cry no-wolf) from the trade talks.

London Stock Exchange’s shares touch an all-time high on Hong Kong Exchange’s £29.7billion bid
The Canadian election race is on – after a trip-up earlier this year, Trudeau leads in the polls… just
…while Johnson’s lead in UK polls slims to 1% in latest ComRes poll (Cons 30%/ Lab 29%/ Lib 17%)
… and his government is forced to publish its worst-case Brexit scenario paper  
Inditex (-3.9%), parent of Zara fails to see shares sell despite putting 7% sales gains on display.
Donald Trump huffs and puffs on “not wonderful” vaping after vape-related mystery illnesses 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +10.09 (+0.79%) at 1,280 (YTD: 18.14%; 5YR: 50.0%)
MSCI AC World Equities (USD) up +63.44 (+0.69%) at 9,228 (YTD: 18.73%; 5YR: 43.8%)
Barclays Global Aggregate Bonds down -1.17 (-0.23%) at 509 (YTD: 6.24%; 5YR: 9.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +21.54 (+0.72%) at 3,001 (YTD: 19.71%; 5YR: 51.1%)    
NASDAQ up +85.52 (+1.06%) at 8,170 (YTD: 23.12%; 5YR: 78.9%)    
Euro STOXX 50 up +17.83 (+0.51%) at 3,517 (YTD: 17.17%; 5YR: 8.7%)    
FTSE 100 up +70.08 (+0.96%) at 7,338 (YTD: 9.06%; 5YR: 7.8%)    
CAC up +24.85 (+0.44%) at 5,618 (YTD: 18.76%; 5YR: 26.5%)    
DAX up +90.36 (+0.74%) at 12,359 (YTD: 17.05%; 5YR: 28.1%)    
Nikkei 225  up +161.85 (+0.75%) at 21,760 (YTD: 8.72%; 5YR: 36.4%)    
Hang Seng down -95.02 (-0.35%) at 27,064 (YTD: 4.71%; 5YR: 10.0%)    
MSCI Emerging Markets up +8.92 (+0.88%) at 1,017 (YTD: 5.31%; 5YR: -4.2%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.68 (began the year at 2.49; 5 years ago it was 0.56)    
US 10 Year up +0.00 at 1.74 (began the year at 2.68; 5 years ago it was 2.61)    
UK 10 Year down 0.00 at 0.64 (began the year at 1.28; 5 years ago it was 2.53)    
Germany 10 Year up +0.00 at -0.56 (began the year at 0.24; 5 years ago it was 1.08)    
France 10 Year up +0.00 at -0.26 (began the year at 0.70; 5 years ago it was 1.43)    
Italy 10 Year down 0.00 at 0.97 (began the year at 2.74; 5 years ago it was 2.46)    
Japan 10 Year down -0.01 at -0.22 (began the year at -0.01; 5 years ago it was 0.57)    
Barclays EM Basket up +0.02 at 5.56 (began the year at 6.22; 5 years ago it was 5.38)
    
Selected Currencies    
$ weakened -0.0004 versus € (-0.04%) at 1.1011 ($: YTD: 3.85%; 5YR: 15.1%)    
€ weakened -0.0005 versus £ (+0.04%) at 1.1196 (€: YTD: -0.59%; 5YR: 12.0%)    
$ weakened -0.0009 versus £ (-0.07%) at 1.2327 ($: YTD: 3.29%; 5YR: 24.2%)    
¥ weakened -0.2500 versus $ (-0.23%) at 108.0200 (¥: YTD: -1.52%; 5YR: -0.8%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.11 (+0.18%) at 61.67 (YTD: 15.99%; 5YR: -36.0%)    
WTI Crude ($/bbl) down -1.65 (-2.87%) at 55.75 (YTD: 22.77%; 5YR: -39.9%)    
Gold ($/ozt) down -1.62 (-0.11%) at 1495.63 (YTD: 16.62%; 5YR: 21.6%)    
Copper ($/mt) down -52.50 (-0.90%) at 5772.50 (YTD: -3.23%; 5YR: -15.5%)    
    
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