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4 September 2019

04/09/2019

Market Data and Morning Chat

Morning Chat 

In the Pitts: Boris Johnson’s honeymoon appears to be over. He lost his majority when MP Phillip Lee crossed to the Lib-Dems before the first vote. He also lost the motion over today’s emergency debate to consider Hilary Benn’s bill by 328 to 301 (The last Prime Minister to lose his first vote was Pitt the Younger in 1793). 21 Conservatives broke ranks and so have lost the whip. Boris responded by confirming the government will table a motion for an October 15 general election (not the originally planned 14thas it conflicted with a religious festival). That’s day one!

Oh, yeah and markets were a little bit rough too: Given the parliamentary kerfuffle, you might’ve expected the pound to have had a less than sterling time – wait, it rallied! The modest gain likely from a perceived increased probability of a remain/deal Brexit outcome. The Euro gained against the dollar too. Equities – they really suffe…, no, they didn’t. UK equities saw only a sliver of a slip. Europe? Down at most a third of a percent. The US though lost about 1% on weak manufacturing PMI data. Meanwhile, other than the Italians, bond investors appear they couldn’t have cared less. 

The Italians? Don’t Conte them out just yet: Matteo Salvini, leader of Lega Nord, looks to have misplayed his hand. With his party polling near 40%, he vacillated over pulling the plug on his coalition with 5-Star. Now it may be too late; his polling’s slipped 6-7 points, and Prime Minister Conte appears on the cusp of patching together a left-wing majority with an alliance between 5-Star and the Democratic Party rather than going to the polls. Italian government bond investors are happy with yields falling ¼% in a week, but Salvini calls it undemocratic. Lot of that going round.

The Hang Seng’s started well today, up 3.1% after a month in the doldrums on protests
Prayers to St. Michael don’t look to have helped as M&S (-1.5%) likely to fall out of the FTSE100
Meanwhile food & drink companies generally led the UK market up yesterday 
Ferguson (+2.1%) taps into gains on news of demerger of the UK business to focus on US
Every little helps Tesco (+0.4%) as it sold its mortgage business to Lloyds bank

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -6.72 (-0.54%) at 1,240 (YTD: 14.50%; 5YR: 44.3%)
MSCI AC World Equities (USD) down -39.90 (-0.44%) at 8,939 (YTD: 15.02%; 5YR: 37.8%)
Barclays Global Aggregate Bonds up +1.24 (+0.24%) at 515 (YTD: 7.49%; 5YR: 9.6%)    
    
Selected Equity Indices (Capital returns)    
S&P 500 down -20.19 (-0.69%) at 2,906 (YTD: 15.93%; 5YR: 45.5%)    
NASDAQ down -88.72 (-1.11%) at 7,874 (YTD: 18.67%; 5YR: 72.6%)    
Euro STOXX 50 down -11.80 (-0.34%) at 3,421 (YTD: 13.97%; 5YR: 4.4%)    
FTSE 100 down -13.75 (-0.19%) at 7,268 (YTD: 8.03%; 5YR: 5.7%)    
CAC down -26.97 (-0.49%) at 5,466 (YTD: 15.54%; 5YR: 21.6%)    
DAX down -42.92 (-0.36%) at 11,911 (YTD: 12.80%; 5YR: 22.5%)    
Nikkei 225  up +23.98 (+0.12%) at 20,649 (YTD: 3.17%; 5YR: 31.7%)    
Hang Seng up +754.82 (+2.96%) at 26,283 (YTD: 1.69%; 5YR: 3.9%)    
MSCI Emerging Markets down -10.49 (-1.07%) at 973 (YTD: 0.78%; 5YR: -11.5%)    
    
Selected Government Bond Yields    
US 10 Year up +0.03 at 1.49 (began the year at 2.68; 5 years ago it was 2.45)    
US 2 Year up +0.01 at 1.46 (began the year at 2.49; 5 years ago it was 0.53)    
UK 10 Year down -0.01 at 0.41 (began the year at 1.28; 5 years ago it was 2.49)    
Germany 10 Year up +0.03 at -0.68 (began the year at 0.24; 5 years ago it was 0.97)    
France 10 Year up +0.03 at -0.37 (began the year at 0.70; 5 years ago it was 1.30)    
Italy 10 Year down -0.05 at 0.82 (began the year at 2.74; 5 years ago it was 2.35)    
Japan 10 Year up +0.00 at -0.29 (began the year at -0.01; 5 years ago it was 0.53)    
Barclays EM Basket up +0.02 at 5.49 (began the year at 6.22; 5 years ago it was 5.29)
    
Selected Currencies    
$ weakened -0.0013 versus € (-0.12%) at 1.0983 ($: YTD: 4.10%; 5YR: 15.2%)    
€ weakened -0.0010 versus £ (+0.09%) at 1.1033 (€: YTD: 0.88%; 5YR: 14.5%)    
$ weakened -0.0025 versus £ (-0.21%) at 1.2117 ($: YTD: 4.93%; 5YR: 25.9%)    
¥ weakened -0.3100 versus $ (-0.29%) at 106.1900 (¥: YTD: -3.27%; 5YR: -0.8%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.36 (+0.62%) at 58.78 (YTD: 10.55%; 5YR: -41.7%)    
WTI Crude ($/bbl) down -1.16 (-2.11%) at 53.94 (YTD: 18.78%; 5YR: -43.5%)    
Gold ($/ozt) down -9.72 (-0.63%) at 1537.40 (YTD: 19.88%; 5YR: 21.8%)    
Copper ($/mt) down -10.00 (-0.18%) at 5610.00 (YTD: -5.95%; 5YR: -18.7%)    
    
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