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12th March 2020

12/03/2020

Market Data and Morning Chat

Morning Chat

Priorities, eh? International events figures centrally in the UK budget with £30billion put forward to respond to the Covid-19 situation – mainly supporting the NHS and relaxation of sick pay and business rates conditions. Otherwise, there was little reform to personal taxation, although the NI threshold increased from £8,362 to £9,500, pension taxation at high income levels was reformed and women’s sanitary products tax was eliminated. Fuel and alcohol duties were frozen – so you don’t get hit more if you drink or drive – although tobacco tax is up. Entrepreneurs’ Relief is cut from £10million to £1million and there’s £600billion for infrastructure. 

Some Key Numbers for tax year 2020/21
…National Insurance threshold increased to £9,500 / Capital Gains Allowance £12,300
…Lifetime allowance raised 1.7% to £1,073,100 / Junior ISA limit £9,000
…Pension tax taper limit raised to £200,000 but minimum allowance cut to £4,000
…Overseas buyers face an extra 2% stamp duty  for second homes (not the 3% mooted)

The knack to flying is learning how to throw yourself at the ground and miss: Investors are still learning. Hopefully flying will come but for now, Trump’s banned flights to the US from Europe ex UK and while European equities had signalled green and gained altitude yesterday morning, this news deflated the gains.  Stateside, late recoveries that land most days weren’t there either meaning the ban left equities swooping down around 5% into a bear market. Until we get greater clarity on Covid-19 (such as any seasonally diminishment like flu and SARS) or any new OPEC+ oil discussions the markets remain grizzly.

Drilling down on oil data: Speaking of oil, the US Energy Information Administration released their weekly inventory data. OK, it’s only up to last Friday – before the failed OPEC talks – but it showed a fairly standard, seasonally on-trend increase in crude inventories. There were also seasonally on-trend, standard declines in gasoline and distillates inventories too (the latter running only slightly above its 25-year average).  In all, looking like a reasonably balanced market with global demand running just under 100million barrels/day (based on OPEC’s recent data). So, you can see how a 3-4% supply increase (about 2½years worth) causes such disarray.

Futures point to another day of dismal red screens over Trump’s flight ban
Italy went into full quarantine with orders all shops to close bar grocers and pharmacies to close
Christiane Legarde and the ECB will offer their likely creative response to Covid-19 today  

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -41.94 (-3.48%) at 1,162 (YTD: -15.47%; 5YR: 28.4%)
MSCI AC World Equities (USD) down -338.71 (-3.89%) at 8,377 (YTD: -16.06%; 5YR: 29.3%)
Barclays Global Aggregate Bonds down -3.31 (-0.62%) at 528 (YTD: 3.23%; 5YR: 19.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -140.85 (-4.89%) at 2,741 (YTD: -15.15%; 5YR: 32.7%)    
NASDAQ down -392.20 (-4.70%) at 7,952 (YTD: -11.37%; 5YR: 62.5%)    
Euro STOXX 50 down -4.46 (-0.15%) at 2,906 (YTD: -22.42%; 5YR: -20.2%)    
FTSE 100 down -83.71 (-1.40%) at 5,877 (YTD: -22.09%; 5YR: -13.1%)    
CAC down -26.36 (-0.57%) at 4,610 (YTD: -22.88%; 5YR: -7.6%)    
DAX down -36.81 (-0.35%) at 10,439 (YTD: -21.21%; 5YR: -11.5%)    
Nikkei 225  down -856.43 (-4.41%) at 18,560 (YTD: -21.55%; 5YR: -2.3%)    
Hang Seng down -885.00 (-3.51%) at 24,347 (YTD: -13.63%; 5YR: 2.3%)    
MSCI Emerging Markets down -17.92 (-1.86%) at 947 (YTD: -15.08%; 5YR: -0.2%)    
    
Selected Government Bond Yields    
US 2 Year down -0.09 at 0.43 (began the year at 1.57; 5 years ago it was 0.66)    
US 10 Year down -0.10 at 0.77 (began the year at 1.92; 5 years ago it was 2.12)    
UK 10 Year up +0.06 at 0.30 (began the year at 0.82; 5 years ago it was 1.74)    
Germany 10 Year down -0.04 at -0.78 (began the year at -0.19; 5 years ago it was 0.25)
France 10 Year down -0.02 at -0.34 (began the year at 0.12; 5 years ago it was 0.49)    
Italy 10 Year up +0.08 at 1.26 (began the year at 1.41; 5 years ago it was 1.13)    
Japan 10 Year up +0.02 at -0.06 (began the year at -0.02; 5 years ago it was 0.38)    
Barclays EM Basket up +0.07 at 3.94 (began the year at 4.27; 5 years ago it was 5.17)
    
Selected Currencies    
$ weakened -0.0026 versus € (-0.23%) at 1.1311 ($: YTD: -0.73%; 5YR: -6.6%)    
€ strengthened +0.0056 versus £ (-0.49%) at 1.1331 (€: YTD: 4.25%; 5YR: 23.6%)    
$ strengthened +0.0036 versus £ (+0.28%) at 1.2814 ($: YTD: 3.39%; 5YR: 13.8%)    
¥ strengthened +1.1100 versus $ (+1.07%) at 103.6400 (¥: YTD: -4.77%; 5YR: 17.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -1.85 (-5.36%) at 32.66 (YTD: -50.83%; 5YR: -42.0%)    
WTI Crude ($/bbl) down -1.38 (-4.02%) at 32.98 (YTD: -45.99%; 5YR: -31.5%)    
Gold ($/ozt) down -6.50 (-0.40%) at 1637.08 (YTD: 7.50%; 5YR: 41.9%)    
Copper ($/mt) down -37.00 (-0.66%) at 5529.00 (YTD: -10.45%; 5YR: -3.5%)    
    
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