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10th February 2020

10/02/2020

Market Data and Morning Chat

Morning Chat 

Not the reasons employed: The Chinese coronavirus outbreak has been cited as the headline reason for market declines over the last couple of weeks. Sure enough, Friday’s marginal declines were blamed on the virus numbers reaching those of the SARS epidemic of 2003.  It was enough to offset a strong 225,000 US non-farm payrolls, 3.1% wage gain and even better (per capita) 34,500 Canadian payroll increase. Don’t despair however, last week proved to be a stellar rebound overall with major markets gaining 2½ to as much as 5¼% (Italy) on the strength of broad improvement in the markit manufacturing surveys.

Can we rack up another good week? The first week of any month is often firmly driven, one way or another, by forward-looking sentiment surveys and employment data. The second week’s focus is on the US JOLTS report and, more widely, inflation and industrial production data which is usually less influential – unless inflation is out of control (which it isn’t). This week however will also see hundreds of further earnings releases and that will move individual names. Moreover, we’ll also get UK and German Q4 GDP with only 0.0% and 0.1% expected respectively (recall, France and Italy announced marginal contractions).

What's the Craic? Is maith an scéalaí an aimsir – time will tell. However, for now, Irish election  results are still in a state of flux. Sinn Féin had a great day beating both Leo Varadkar’s Fine Gail and Fianna Fáil with 24.5% of the vote – the others had 20.9% and 22.2% respectively. The only problem is Sinn Féin only ran 42 candidates, limiting their seats to a predicted 37.  Fianna Fáil will likely get 45, Fine Gail 36 and you need 80 for a majority. So it looks like a tight Fianna Fáil-led coalition. Only Ireland’s Brexit stance appears unchanged. 

The coronavirus conundrum continues to plague markets as equity futures point slightly down
FTSE100 stock NMC Health (-22.2%) down heavily on analyst Muddy Waters’ negative remarks
Hargreaves Lansdown (-6.1%) following Peter Hargreaves’ £550million share disposal
Abbvie (+5.8%) injected good news into the market with solid Q4 and 8% growth guidance…
… While also reaffirming Allergan, who reports today, purchase timeline 
Investors shirty with Hanesbrands (-1.2%) only in-line earnings and lowered expectations
Take-Two Interactive (-11.9%) declines as outlook paused by lull before forthcoming PS5 roll-out

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -6.63 (-0.47%) at 1,409 (YTD: 2.44%; 5YR: 58.5%)
MSCI AC World Equities (USD) down -48.31 (-0.47%) at 10,189 (YTD: 2.10%; 5YR: 57.9%)
Barclays Global Aggregate Bonds up +1.18 (+0.23%) at 515 (YTD: 0.57%; 5YR: 14.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -18.07 (-0.54%) at 3,328 (YTD: 3.00%; 5YR: 60.9%)    
NASDAQ down -51.64 (-0.54%) at 9,521 (YTD: 6.11%; 5YR: 98.9%)    
Euro STOXX 50 down -7.03 (-0.18%) at 3,798 (YTD: 1.42%; 5YR: 12.3%)    
FTSE 100 down -38.09 (-0.51%) at 7,467 (YTD: -1.00%; 5YR: 9.3%)    
CAC down -8.43 (-0.14%) at 6,030 (YTD: 0.86%; 5YR: 28.4%)    
DAX down -61.01 (-0.45%) at 13,514 (YTD: 2.00%; 5YR: 25.7%)    
Nikkei 225  down -142.00 (-0.60%) at 23,686 (YTD: 0.12%; 5YR: 34.2%)    
Hang Seng down -170.34 (-0.62%) at 27,234 (YTD: -3.39%; 5YR: 11.0%)    
MSCI Emerging Markets down -10.74 (-0.97%) at 1,092 (YTD: -2.06%; 5YR: 12.9%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.40 (began the year at 1.57; 5 years ago it was 0.65)    
US 10 Year down 0.00 at 1.58 (began the year at 1.92; 5 years ago it was 2.00)    
UK 10 Year down -0.01 at 0.56 (began the year at 0.82; 5 years ago it was 1.67)    
Germany 10 Year down 0.00 at -0.39 (began the year at -0.19; 5 years ago it was 0.37)    
France 10 Year down 0.00 at -0.14 (began the year at 0.12; 5 years ago it was 0.70)    
Italy 10 Year up +0.02 at 0.96 (began the year at 1.41; 5 years ago it was 1.67)    
Japan 10 Year down -0.02 at -0.06 (began the year at -0.02; 5 years ago it was 0.39)    
Barclays EM Basket down -0.03 at 3.98 (began the year at 4.27; 5 years ago it was 5.08)
    
Selected Currencies    
$ weakened -0.0005 versus € (-0.05%) at 1.0948 ($: YTD: 2.50%; 5YR: 3.2%)    
€ strengthened +0.0026 versus £ (-0.22%) at 1.1764 (€: YTD: 0.42%; 5YR: 14.7%)    
$ strengthened +0.0021 versus £ (+0.16%) at 1.2880 ($: YTD: 2.89%; 5YR: 15.6%)    
¥ strengthened +0.0100 versus $ (+0.01%) at 109.8000 (¥: YTD: 1.11%; 5YR: 8.7%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.10 (-0.19%) at 53.76 (YTD: -19.06%; 5YR: -4.5%)    
WTI Crude ($/bbl) down -0.63 (-1.24%) at 50.32 (YTD: -17.59%; 5YR: -2.7%)    
Gold ($/ozt) up +2.86 (+0.18%) at 1572.04 (YTD: 3.23%; 5YR: 27.4%)    
Copper ($/mt) down -72.00 (-1.26%) at 5663.00 (YTD: -8.28%; 5YR: 0.2%)    
    
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