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12th February 2020

12/02/2020

Market Data and Morning Chat

Morning Chat

A nugget of purest green? Equity markets started the day with a cunning plan. Futures rallied despite the widening coronavirus outbreak – now properly but boringly named Covid-19 – possibly over reports the lethality was looking lower than originally estimated.  At this stage it’s all still supposition.  For all that, European stocks closed up with travel stocks leading the journey. Tui soared 13.1%, EasyJet 4.0% and International Airlines Group 3.8%.  Meanwhile, the UK market – which rallied ¾% - was likely also bolstered by slightly better-than-expected GDP data. Q4 may have been flat, but Q3 was revised up, and could have been worse.

Not really a nugget, it's more of a splat: Surely then the US must have had a good day? Well, it started out that way, and was going swimmingly to within a couple of hours of the closing bell.  Over 10% of the S&P500 stocks were hitting new all-time highs, including the likes of Alphabet, DR Horton, Amazon, Salesforce, United Technologies and Lockheed Martin. Then came Jerome Powell’s comments to the Senate Banking Committee. He warned about Covid-19 and noted business activity has slowed. Splat. The markets trimmed their gains to close in the green, just, but off their highs. 

But tomorrow - who knows, or dares to dream? Lord Percy may have seen the road to gold in green, but the Democrat hopefuls are looking to the green fields of the New Hampshire primary to pave their way to the White House. Yup, primary – a vote rather than musical chairs. Going into the primary, the favorite to win the most delegates was Bernie Saunders followed by Buttigieg (pronounced Buddha-judge) then Warren & Biden. That’s much how it shook out, though Amy Klobuchar carried on from winning the first precinct last night to supplant Warren, putting Biden fourth, Warren fifth. 

The futures screen is almost the purest green – except the Swiss - with markets up ¼ to 1%
Boris and the Cabinet have approved the £100billion HS2 plan connecting London & Birmingham
Heineken (+0.4%) puts a great head on 2019 with volumes ahead of estimates and dividend rise
Gucci-owner Kering (+0.0%) stated today that Covid-19-impacted growth slow less than feared
US court approved T-Mobile’s (11.8%) $71.2billion sector-changing take-over of Sprint (76.3%) 
… shares of T-Mobile parent Deutsche Telekom (+3.8%) also rallied on the judgement
Under Armour (-18.9%) get their knickers in a twist with poor earnings and painful 2020 outlook
MGM Resorts announces results aftermarket tonight hopefully giving insight to Covid-19 effects
Oh, and Mr. Blackadder, sir, just so you know, next week the Chat takes a half-term hiatus

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +5.65 (+0.40%) at 1,419 (YTD: 3.17%; 5YR: 58.3%)
MSCI AC World Equities (USD) up +34.85 (+0.34%) at 10,260 (YTD: 2.81%; 5YR: 57.5%)
Barclays Global Aggregate Bonds down -0.57 (-0.11%) at 514 (YTD: 0.51%; 5YR: 13.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +5.66 (+0.17%) at 3,358 (YTD: 3.93%; 5YR: 60.8%)    
NASDAQ up +10.55 (+0.11%) at 9,639 (YTD: 7.43%; 5YR: 98.4%)    
Euro STOXX 50 up +32.66 (+0.86%) at 3,826 (YTD: 2.15%; 5YR: 11.9%)    
FTSE 100 up +52.56 (+0.71%) at 7,499 (YTD: -0.57%; 5YR: 9.8%)    
CAC up +39.09 (+0.65%) at 6,055 (YTD: 1.28%; 5YR: 28.1%)    
DAX up +133.81 (+0.99%) at 13,628 (YTD: 2.86%; 5YR: 24.8%)    
Nikkei 225  up +175.23 (+0.74%) at 23,861 (YTD: 0.86%; 5YR: 35.2%)    
Hang Seng up +297.87 (+1.08%) at 27,882 (YTD: -1.09%; 5YR: 14.2%)    
MSCI Emerging Markets up +12.48 (+1.15%) at 1,099 (YTD: -1.37%; 5YR: 13.2%)    
    
Selected Government Bond Yields    
US 2 Year up +0.02 at 1.44 (began the year at 1.57; 5 years ago it was 0.62)    
US 10 Year up +0.03 at 1.63 (began the year at 1.92; 5 years ago it was 1.98)    
UK 10 Year up +0.01 at 0.57 (began the year at 0.82; 5 years ago it was 1.66)    
Germany 10 Year up +0.03 at -0.36 (began the year at -0.19; 5 years ago it was 0.32)    
France 10 Year up +0.03 at -0.12 (began the year at 0.12; 5 years ago it was 0.64)    
Italy 10 Year up +0.02 at 0.98 (began the year at 1.41; 5 years ago it was 1.65)    
Japan 10 Year up +0.02 at -0.04 (began the year at -0.02; 5 years ago it was 0.39)    
Barclays EM Basket down 0.00 at 3.97 (began the year at 4.27; 5 years ago it was 5.07)
    
Selected Currencies    
$ strengthened +0.0011 versus € (+0.10%) at 1.0911 ($: YTD: 2.83%; 5YR: 4.2%)    
€ weakened -0.0024 versus £ (+0.20%) at 1.1882 (€: YTD: -0.58%; 5YR: 13.6%)    
$ weakened -0.0013 versus £ (-0.10%) at 1.2964 ($: YTD: 2.25%; 5YR: 15.7%)    
¥ weakened -0.0900 versus $ (-0.08%) at 109.9100 (¥: YTD: 1.21%; 5YR: 8.2%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.90 (+1.67%) at 54.93 (YTD: -17.30%; 5YR: -3.7%)    
WTI Crude ($/bbl) up +0.37 (+0.75%) at 49.94 (YTD: -18.21%; 5YR: 2.3%)    
Gold ($/ozt) down -1.59 (-0.10%) at 1564.21 (YTD: 2.72%; 5YR: 28.2%)    
Copper ($/mt) up +78.00 (+1.38%) at 5745.00 (YTD: -6.95%; 5YR: 2.6%)    
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros