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17 September 2019

17/09/2019

Market Data and Morning Chat

Morning Chat

It’s oil over the news: Well, you’ve surely heard about the drone strike on the Saudi Abqaiq oil processing facility.  Apparently the attack has capped close to 50% of Saudi production, or 5% of global supply.  Brent and West Texas oil prices gushed up over 14½% - initially even more registering the biggest one-day rise recorded – and gasoline futures were not far behind, up 12¾%. Concomitantly, oil-dependent stocks – like American Airlines (-7.3%) and BA-parent IAG (-2.7%) – were amidst market laggards, while the oil companies – BP (+4.3%), Royal Dutch (2.6%), Total (+2.5%), Murphy Oil (+24.9%) and Apache (+28.5%) – led market risers. 

Delicate China: Not that markets had that great a day. The oil price rise triggered an increased fear of inflation.  How do you fight inflation – keep rates high.  Investors saw the probability of a stand-pat outcome by the US Fed rise from about one in four to one in three. The possibility of less stimulus tempered market enthusiasm. That said, the Chinese economic data released early yesterday didn’t help. Industrial production was expected to rise 5.2%, but it only managed 4.4% on slower manufacturing and mining.   Meanwhile the retail sales growth slowed to 7.5% on lower autos and jewelry sales.

Plane speaking about trade: Then there was the World Trade Organisation (WTO) judgement on Airbus subsidies. Their final ruling held the EU had given Airbus state aid to the tune of $11billion. As a result, the US a flight-plan of tariffs on a wide range of EU goods including – obviously – airplanes and parts, food, drinks, luxury goods and base metal parts. Unsurprising, the tariff news hit companies like Airbus (-3.7%), Rolls Royce (-2.5%), Hermes (-2.9%) and LVMH (-2.6%). Of course there’s a flip-side to these WTO-approved tariffs; The EU has its own WTO case over illegal US subsidies to Boeing

The market futures are a bit mixed today but Japan is up even though China’s down
… with Chinese investors disappointed the People’s Bank of China didn’t cut rates
Buried by the oil news, Donald Trump stated the US and Japan have agreed a tariff framework

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -3.35 (-0.26%) at 1,282 (YTD: 18.33%; 5YR: 49.9%)
MSCI AC World Equities (USD) down -41.55 (-0.45%) at 9,237 (YTD: 18.85%; 5YR: 43.4%)
Barclays Global Aggregate Bonds up +0.21 (+0.04%) at 507 (YTD: 5.84%; 5YR: 9.0%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 down -9.43 (-0.31%) at 2,998 (YTD: 19.59%; 5YR: 49.8%)    
NASDAQ down -23.17 (-0.28%) at 8,154 (YTD: 22.88%; 5YR: 78.7%)    
Euro STOXX 50 down -31.66 (-0.89%) at 3,518 (YTD: 17.23%; 5YR: 8.7%)    
FTSE 100 down -46.05 (-0.63%) at 7,321 (YTD: 8.82%; 5YR: 8.0%)    
CAC down -53.23 (-0.94%) at 5,602 (YTD: 18.42%; 5YR: 26.4%)    
DAX down -88.22 (-0.71%) at 12,380 (YTD: 17.25%; 5YR: 28.1%)    
Nikkei 225  up +13.03 (+0.06%) at 22,001 (YTD: 9.93%; 5YR: 38.3%)    
Hang Seng down -406.42 (-1.50%) at 26,718 (YTD: 3.38%; 5YR: 9.6%)    
MSCI Emerging Markets up +0.47 (+0.05%) at 1,027 (YTD: 6.35%; 5YR: -3.3%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.75 (began the year at 2.49; 5 years ago it was 0.57)    
US 10 Year down -0.01 at 1.83 (began the year at 2.68; 5 years ago it was 2.62)    
UK 10 Year down -0.07 at 0.69 (began the year at 1.28; 5 years ago it was 2.52)    
Germany 10 Year down -0.01 at -0.49 (began the year at 0.24; 5 years ago it was 1.05)    
France 10 Year down -0.01 at -0.21 (began the year at 0.70; 5 years ago it was 1.41)    
Italy 10 Year up +0.02 at 0.86 (began the year at 2.74; 5 years ago it was 2.42)    
Japan 10 Year up +0.01 at -0.16 (began the year at -0.01; 5 years ago it was 0.56)    
Barclays EM Basket up +0.02 at 5.56 (began the year at 6.22; 5 years ago it was 5.32)
    
Selected Currencies    
$ weakened -0.0001 versus € (-0.01%) at 1.1004 ($: YTD: 3.91%; 5YR: 15.0%)    
€ strengthened +0.0014 versus £ (-0.12%) at 1.1277 (€: YTD: -1.30%; 5YR: 11.7%)    
$ strengthened +0.0016 versus £ (+0.13%) at 1.2410 ($: YTD: 2.64%; 5YR: 23.9%)    
¥ weakened -0.2300 versus $ (-0.21%) at 108.2000 (¥: YTD: -1.35%; 5YR: -0.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.59 (+0.86%) at 68.97 (YTD: 29.72%; 5YR: -29.1%)    
WTI Crude ($/bbl) up +8.05 (+14.68%) at 62.90 (YTD: 38.52%; 5YR: -33.7%)    
Gold ($/ozt) down -2.37 (-0.16%) at 1496.02 (YTD: 16.65%; 5YR: 22.3%)    
Copper ($/mt) down -104.50 (-1.75%) at 5870.00 (YTD: -1.59%; 5YR: -14.9%)    
    
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