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10th September 2020

10/09/2020

Market Data and Morning Chat

The boys are back in town: After three days of being pounded, global tech stocks leapt +3.1% – their biggest single day’s gain since the strong April rallies April – helping drive the broader indices.  Chip makers led the charge with Qorvo (+7.5%), Nvidia (+6.7%) & Skyworks (+5.2%) coming in 1-2-3 on the S&P500.   Technical analysts – prognosticators who base analysis off charts and nothing specific to the tech sector – noted the markets rebounded from support levels and usually bounce after three days of sales. It’s as good a reason as any given the limited significant economic data-points bar an okay JOLTS report.

Do what you want, get a bad reputation: News wires though were also buzzing over Brexit.  The UK Conservative government are proposing the UK Internal Markets Bill which seeks “to make provision in connection with the internal market for goods and services in the United Kingdom”. A tidying-up exercise? Read the 48-page bill one way it could be an interpretation.  Problem is it’s riling everyone. The Scots see it treading on their agriculture powers. The EU see the section 45 “notwithstanding” element as a breach of the Withdrawal Agreement and thus breaches international law. The pound didn’t like it either.

Inventories of black rose: The Energy Information Administration offers more clarification today, but yesterday’s American Petroleum Institute oil report showed a 2.97million barrel increase in inventories when analysts called for a 1.34million barrel drawdown. Crude prices still rose alongside the equity rally, but the inventory gain did take some shine off oil’s recovery. The problem is inventory expansion doesn’t usually appear until later in September and it could signal an early onset of refinery maintenance programs. Oil traders, reading between the lines (or pipes) assumed that must mean weak demand triggered by weak economic growth so barrelled out of oil.
 
 Despite fears the rally could fizzle, this morning’s equity futures are showing modest gains
 … with Europe likely tempered by caution before today’s ECB rate & stimulus announcements
 …while Asia shows slight gains & Japan rallies 1¼% on strong 6.3% machinery orders data
 After 92 years, Exxon exits the Dow, replaced by software developer salesforce.com
 … Viagra-maker Pfizer couldn’t keep up either and is replaced by Biotech Amgen
 … while Pentagon supplier Raytheon had no defence against Honeywell inclusion.
 Tesla (+13.9%) did a significant U-turn to recoup about half of the previous days loss
 Tiffany (-4.8%) lost sparkle for LVMH (-0.1%); the marriage is off due to French venue problems
 Global airline stocks hit  turbulence yesterday as numerous carriers issued downbeat forecasts
 …while a telecoms rally pushed BT (+5.6%) to the top of the UK leader board 
 
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Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +19.54 (+1.41%) at 1,408 (YTD: 2.35%; 5YR: 64.8%)
MSCI AC World Equities (USD) up +169.70 (+1.68%) at 10,290 (YTD: 3.12%; 5YR: 66.6%)
Barclays Global Aggregate Bonds down -0.53 (-0.10%) at 541 (YTD: 5.71%; 5YR: 21.5%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +67.12 (+2.01%) at 3,399 (YTD: 5.21%; 5YR: 74.1%)
NASDAQ up +293.87 (+2.71%) at 11,142 (YTD: 24.17%; 5YR: 132.3%)
Dow Jones Industrial up +439.58 (+1.60%) at 27,940 (YTD: -2.10%; 5YR: 71.1%)
Euro STOXX 50 up +57.46 (+1.76%) at 3,325 (YTD: -11.22%; 5YR: 3.2%)
FTSE 100 up +82.54 (+1.39%) at 6,013 (YTD: -20.28%; 5YR: -2.3%)
CAC up +69.46 (+1.40%) at 5,043 (YTD: -15.64%; 5YR: 9.7%)
DAX up +268.88 (+2.07%) at 13,237 (YTD: -0.09%; 5YR: 29.6%)
Nikkei 225  up +202.93 (+0.88%) at 23,235 (YTD: -1.78%; 5YR: 27.0%)
Hang Seng down -12.16 (-0.05%) at 24,457 (YTD: -13.24%; 5YR: 13.4%)
MSCI Emerging Markets down -1.76 (-0.16%) at 1,086 (YTD: -2.59%; 5YR: 35.0%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.14 (began the year at 1.57; 5 years ago it was 0.73)
US 10 Year down 0.00 at 0.70 (began the year at 1.92; 5 years ago it was 2.22)
UK 10 Year up +0.05 at 0.24 (began the year at 0.82; 5 years ago it was 1.87)
Germany 10 Year up +0.00 at -0.46 (began the year at -0.19; 5 years ago it was 0.69)
France 10 Year up +0.00 at -0.17 (began the year at 0.12; 5 years ago it was 1.10)
Italy 10 Year down 0.00 at 1.02 (began the year at 1.41; 5 years ago it was 1.86)
Japan 10 Year down 0.00 at 0.02 (began the year at -0.02; 5 years ago it was 0.35)
Barclays EM Basket up +0.00 at 3.77 (began the year at 4.27; 5 years ago it was 5.48)
 
Selected Currencies
$ weakened -0.0026 versus € (-0.22%) at 1.1829 ($: YTD: -5.34%; 5YR: -5.0%)
€ strengthened +0.0019 versus £ (-0.17%) at 1.1006 (€: YTD: 7.33%; 5YR: 24.5%)
$ weakened -0.0006 versus £ (-0.05%) at 1.3019 ($: YTD: 1.84%; 5YR: 15.7%)
¥ strengthened +0.1600 versus $ (+0.15%) at 106.0900 (¥: YTD: -2.35%; 5YR: 13.7%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.12 (+0.30%) at 40.14 (YTD: -39.57%; 5YR: -16.5%)
WTI Crude ($/bbl) up +1.29 (+3.51%) at 38.05 (YTD: -37.68%; 5YR: -13.8%)
Gold ($/ozt) down -4.04 (-0.21%) at 1944.37 (YTD: 27.68%; 5YR: 75.0%)
Copper ($/mt) up +66.00 (+0.99%) at 6734.00 (YTD: 9.07%; 5YR: 25.5%)
 
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