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12th May 2020

12/05/2020

Market Data and Morning Chat

Morning Chat

Up: Choices, choices, choices.  With US treasures slipping to record-low yields, US corporate bonds are seeing a surge in interest – ok , attention – at the present.  New bond issues are running nearly double last year’s total over the first four months of 2020. More, we’ve seen the best four individual weeks by value of all-time during the period and this while the US Treasury runs record-size auctions too. There have been some unsuccessful launches – United Airlines issue didn’t get off the ground – but some, like Disney yesterday, are conjuring up billions to shore up their finances while rates are low.
 
Down: As lockdown conditions ease across Europe and Asia, gasoline consumption is turning up, especially as commuters avoid public transport.  However, the growing consumption is not yet tracing through to much higher oil prices.  The supply side still rules sentiment, and news Saudi Arabia feels the need to cut production from June by another 1million barrels a day shows there’s still an imbalance. Oil prices slipped down 1½ to 2½% over the news and renewed concerns storage capacity remains limited, though the worries eased and prices gained slightly with news Kuwait and the UAE will also trim output from June 
 
And Sideways: When the highlight of economic news reel is Italian March industrial production lower than a dartboard forecast and Turkish unemployment… for February, there’s little distracting investors from the coronavirus numbers. Yet even those numbers gave little impetus (unless you note Russia’s total case number a day from passing the UK’s, Brazil a day from Germany’s and India a few days from China’s). Lockdown easing – seen that – though the UK garnered a modicum of further guidance.  So not much movement … well, except for the German Constitutional Court ruling impinging on the ECB stimulus efforts… that explains Europe’s slip.
 
Equity futures are continuing in the up, down & sideways vein though up’s weak
There’s always a few who spoil it for everyone else as China orders testing…
… for the entire 11million population of Wuhan within the next 10 days after 6 new cases
Not all health is healthy – Zimmer Biomet (-3.2%) earnings down on reduced elective surgeries
Coty (-5.8%) to sell Well & Clairol brands as sales fall more than a quarter in the quarter
Under Armour (-8.9%) announces revenues could come up short, down 50-60% in Q2
Toyota (-2.1% today) sees profit at 9-year low and recovery in the slow lane

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +2.63 (+0.22%) at 1,224 (YTD: -10.97%; 5YR: 32.1%)
MSCI AC World Equities (USD) down -4.61 (-0.05%) at 8,798 (YTD: -11.83%; 5YR: 30.7%)
Barclays Global Aggregate Bonds down -1.26 (-0.24%) at 514 (YTD: 0.53%; 5YR: 14.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +0.52 (+0.02%) at 2,930 (YTD: -9.30%; 5YR: 39.6%)
NASDAQ up +71.02 (+0.78%) at 9,192 (YTD: 2.45%; 5YR: 84.7%)
Euro STOXX 50 down -24.36 (-0.84%) at 2,884 (YTD: -23.00%; 5YR: -19.3%)
FTSE 100 up +3.75 (+0.06%) at 5,940 (YTD: -21.25%; 5YR: -14.3%)
CAC down -59.42 (-1.31%) at 4,490 (YTD: -24.89%; 5YR: -9.7%)
DAX down -79.49 (-0.73%) at 10,825 (YTD: -18.30%; 5YR: -5.6%)
Nikkei 225  up +53.55 (+0.26%) at 20,444 (YTD: -13.58%; 5YR: 4.2%)
Hang Seng down -359.87 (-1.46%) at 24,242 (YTD: -14.00%; 5YR: -11.5%)
MSCI Emerging Markets up +4.25 (+0.47%) at 916 (YTD: -17.83%; 5YR: -11.0%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.17 (began the year at 1.57; 5 years ago it was 0.60)
US 10 Year down -0.02 at 0.69 (began the year at 1.92; 5 years ago it was 2.25)
UK 10 Year up +0.03 at 0.27 (began the year at 0.82; 5 years ago it was 1.98)
Germany 10 Year down 0.00 at -0.51 (began the year at -0.19; 5 years ago it was 0.67)
France 10 Year down 0.00 at -0.01 (began the year at 0.12; 5 years ago it was 0.97)
Italy 10 Year down 0.00 at 1.88 (began the year at 1.41; 5 years ago it was 1.85)
Japan 10 Year down -0.02 at -0.01 (began the year at -0.02; 5 years ago it was 0.44)
Barclays EM Basket down -0.04 at 3.79 (began the year at 4.27; 5 years ago it was 5.14)
 
Selected Currencies
$ weakened -0.0006 versus € (-0.06%) at 1.0814 ($: YTD: 3.70%; 5YR: 3.8%)
€ strengthened +0.0012 versus £ (-0.11%) at 1.1409 (€: YTD: 3.54%; 5YR: 22.5%)
$ strengthened +0.0006 versus £ (+0.05%) at 1.2338 ($: YTD: 6.97%; 5YR: 21.4%)
¥ strengthened +0.2700 versus $ (+0.25%) at 107.4000 (¥: YTD: -1.10%; 5YR: 11.6%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.27 (-0.97%) at 27.50 (YTD: -58.60%; 5YR: -58.5%)
WTI Crude ($/bbl) down -0.34 (-1.39%) at 24.14 (YTD: -60.47%; 5YR: -59.3%)
Gold ($/ozt) up +4.99 (+0.29%) at 1702.34 (YTD: 11.79%; 5YR: 42.6%)
Copper ($/mt) down -17.00 (-0.32%) at 5257.00 (YTD: -14.85%; 5YR: -17.4%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros