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11th February 2020

11/02/2020

Market Data and Morning Chat

Morning Chat

Action this day: Global equity markets provided mixed returns yesterday with gains in Asia, broad but small declines in Europe, and if you were living on the Street, Wall Street, gains averaging around ¾%.  With most market news items continuing to cite the ongoing coronavirus illness, it was no wonder the European markets found little to give a lift, but US markets kept on pumping thanks to strong gains in the tech sector led by Amazon. Amazon shares flow up 2.6%, while the strong tech & media names of 2019 – Microsoft, Visa & Disney – were also in the top ten.

Hammer to fall: The US economy has robust payrolls, improving ISM and Markit surveys, 2.1% Q4 GDP – well above slow growth territory – low interest rates, benign inflation and equities hitting all-time highs. So why one of the popular signals of possible recession, an inverted yield curve (when the 10-year yield, now 1.56%, is lower than the 3-month, now 1.57%), signalling a warning again? Although reliable in the past, slipping into negative territory before the last seven recessions, this time it may be driven more by international purchases and global fears as investors flee to safety in reaction to coronavirus fears. 

I want to break free: Germany’s political turmoil continues. Yesterday, Annegret Kramp-Karrenbauer, AKA AKK, announced her resignation as the leader of Angela Merkel’s Christian Democratic Union in the summer after a new leader is elected.  Her sudden exit (ironically stage right following her statement) came after a number of missteps culminating in the dispute over the apparent CDU cooperation with the far-right Alternative für Deutschland in the Thuringia state election in direct contravention of AKK’s orders. Her departure throws into question the continuation of “Queen” Merkel’s policies after her Chancellorship and a possible rightward policy shift given frontrunning CDU candidates. 
 
Fickle futures have opted to wear green today showing shades from +1/4 to +3/4% 
Will Bernie be Saundering along? We’ll find out more with the New Hampshire primary today
Botox-maker Allergan (+1.3%) earnings weren’t paralysed with earnings topping highest estimate
Revenues remain stable but Daimler (-0.8%) downshifts on dividend to finance EV development
Final Irish seat tally means government formation will require three parties to agree.

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +4.39 (+0.31%) at 1,413 (YTD: 2.76%; 5YR: 59.1%)
MSCI AC World Equities (USD) up +36.33 (+0.36%) at 10,225 (YTD: 2.47%; 5YR: 58.8%)
Barclays Global Aggregate Bonds up +0.29 (+0.06%) at 515 (YTD: 0.62%; 5YR: 14.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +24.38 (+0.73%) at 3,352 (YTD: 3.75%; 5YR: 62.1%)    
NASDAQ up +107.88 (+1.13%) at 9,628 (YTD: 7.31%; 5YR: 100.5%)    
Euro STOXX 50 down -5.31 (-0.14%) at 3,793 (YTD: 1.28%; 5YR: 12.4%)    
FTSE 100 down -19.82 (-0.27%) at 7,447 (YTD: -1.27%; 5YR: 9.2%)    
CAC down -14.08 (-0.23%) at 6,016 (YTD: 0.63%; 5YR: 28.6%)    
DAX down -19.78 (-0.15%) at 13,494 (YTD: 1.85%; 5YR: 25.5%)    
Nikkei 225  down -142.00 (-0.60%) at 23,686 (YTD: 0.12%; 5YR: 34.2%)    
Hang Seng up +364.06 (+1.34%) at 27,605 (YTD: -2.07%; 5YR: 13.5%)    
MSCI Emerging Markets down -4.72 (-0.43%) at 1,087 (YTD: -2.49%; 5YR: 13.1%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.40 (began the year at 1.57; 5 years ago it was 0.66)    
US 10 Year up +0.01 at 1.57 (began the year at 1.92; 5 years ago it was 2.02)    
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 up +0.01 at -0.40 (began the year at -0.19; 5 years ago it was 0.35)    
France 10 Year up +0.01 at -0.16 (began the year at 0.12; 5 years ago it was 0.68)    
Italy 10 Year up +0.01 at 0.96 (began the year at 1.41; 5 years ago it was 1.70)    
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 -0.01 at 3.97 (began the year at 4.27; 5 years ago it was 5.10)
    
Selected Currencies    
$ weakened -0.0002 versus € (-0.02%) at 1.0912 ($: YTD: 2.82%; 5YR: 3.4%)    
€ strengthened +0.0007 versus £ (-0.06%) at 1.1826 (€: YTD: -0.11%; 5YR: 14.1%)    
$ strengthened +0.0005 versus £ (+0.04%) at 1.2905 ($: YTD: 2.70%; 5YR: 15.3%)    
¥ weakened -0.1800 versus $ (-0.16%) at 109.8700 (¥: YTD: 1.17%; 5YR: 9.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.26 (+0.49%) at 53.23 (YTD: -19.86%; 5YR: -1.8%)    
WTI Crude ($/bbl) down -0.75 (-1.49%) at 49.57 (YTD: -18.82%; 5YR: -0.9%)    
Gold ($/ozt) down -6.95 (-0.44%) at 1569.56 (YTD: 3.07%; 5YR: 28.3%)    
Copper ($/mt) up +4.00 (+0.07%) at 5667.00 (YTD: -8.21%; 5YR: 1.3%)    
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros