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13th March 2020

13/03/2020

Market Data and Morning Chat

Morning Chat

Waking from hibernation: The BBC posted a climate change story yesterday “Why bears are coming out of hibernation early” but the title fits as equities are now in a bear market – a decline from the peak of more than 20%. The latest sell-off triggered, maybe, by Trump’s EU arrivals ban, maybe Italy’s full quarantine, or maybe the various official responses to the non-Chinese Covid-19 cases. Whatever the trigger, equities suffered their worst single day decline since 1987 and are down over 20% from their peak, but bear markets are not rare, with 32 in the US since 1900 – one every 3½years. Oh, and an early spring might help with Covid-19.

How grizzly is a bear? After 11 years and 4 days, markets have now closed the longest bull market ever (although there’s an argument it’s shorter based on an intermediate, intraday, bear decline) so we had been putting one off for a while. Bear markets tend to last for some months or more (even years), though, thanks to the Covid-19 scare & OPEC spat, this bear chased the markets down more rapidly than prior attacks and historically, faster bears tend to be shorter – time will tell. Oh, and, generally, the early stages of recovery have provided the larger share of recovery gains.

Spending a Fortnite with the family: Like any market move, this decline has not been uniform. The OPEC oil problems have left energy stocks reeling, while Covid-19 has disproportionately hurt airlines, hotels & cruise lines and conversely seen many health care names, oh, and tissue-maker Kimberly-Clark, decline less. Meanwhile, the Italian quarantine has highlighted other strong names. With schools closed, Italian kids have sorely tested the country’s internet resilience playing Fortnite and Call of Duty online.  Correspondingly, cloud service names like Microsoft, Amazon, Internet-backbone Akamai & ServiceNow – and EA games – have all fallen less than the S&P500’s near-16% year-to-date decline. 

It’s Friday the 13th, but equity futures are clawing back some of the fall with the UK & US up 3% 
… and Australia closed up 4.4% and year-to-date China’s CSI300 is flat in sterling terms
Meanwhile the US Fed injected $500 billion into the repo market with a further $5trillion ready
Roche has US approval for an automated coronavirus test that is 10x faster than at present…
… dramatically improving the identification of infected patients even before they show symptoms
China now at 78% recovered from Covid-19, the UK, with 459 cases now at 4% recovered

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -103.66 (-8.92%) at 1,059 (YTD: -23.01%; 5YR: 17.2%
MSCI AC World Equities (USD) down -829.08 (-9.90%) at 7,548 (YTD: -24.37%; 5YR: 17.1%)
Barclays Global Aggregate Bonds down -8.57 (-1.62%) at 520 (YTD: 1.56%; 5YR: 17.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -260.74 (-9.51%) at 2,481 (YTD: -23.22%; 5YR: 20.8%)    
NASDAQ down -750.25 (-9.43%) at 7,202 (YTD: -19.74%; 5YR: 47.8%)    
Euro STOXX 50 down -360.33 (-12.40%) at 2,545 (YTD: -32.04%; 5YR: -30.4%)    
FTSE 100 down -639.04 (-10.87%) at 5,237 (YTD: -30.56%; 5YR: -22.3%)    
CAC down -565.99 (-12.28%) at 4,044 (YTD: -32.35%; 5YR: -19.3%)    
DAX down -1277.55 (-12.24%) at 9,161 (YTD: -30.85%; 5YR: -23.0%)    
Nikkei 225  down -1128.58 (-6.08%) at 17,431 (YTD: -26.32%; 5YR: -9.5%)    
Hang Seng down -291.40 (-1.20%) at 24,018 (YTD: -14.80%; 5YR: 0.8%)    
MSCI Emerging Markets down -63.50 (-6.71%) at 883 (YTD: -20.77%; 5YR: -6.0%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 0.49 (began the year at 1.57; 5 years ago it was 0.66)    
US 10 Year up +0.06 at 0.86 (began the year at 1.92; 5 years ago it was 2.11)    
UK 10 Year down -0.03 at 0.27 (began the year at 0.82; 5 years ago it was 1.71)    
Germany 10 Year up +0.09 at -0.65 (began the year at -0.19; 5 years ago it was 0.26)    
France 10 Year up +0.03 at -0.08 (began the year at 0.12; 5 years ago it was 0.50)    
Italy 10 Year up +0.04 at 1.79 (began the year at 1.41; 5 years ago it was 1.15)    
Japan 10 Year up +0.09 at 0.02 (began the year at -0.02; 5 years ago it was 0.40)    
Barclays EM Basket up +0.32 at 4.26 (began the year at 4.27; 5 years ago it was 5.18)
    
Selected Currencies    
$ strengthened +0.0010 versus € (+0.09%) at 1.1176 ($: YTD: 0.47%; 5YR: -6.5%)    
€ strengthened +0.0030 versus £ (-0.27%) at 1.1251 (€: YTD: 5.00%; 5YR: 24.8%)    
$ strengthened +0.0046 versus £ (+0.36%) at 1.2575 ($: YTD: 5.19%; 5YR: 14.6%)    
¥ weakened -0.4500 versus $ (-0.43%) at 105.8400 (¥: YTD: -2.59%; 5YR: 14.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +1.98 (+6.34%) at 33.21 (YTD: -50.00%; 5YR: -38.3%)    
WTI Crude ($/bbl) down -1.48 (-4.49%) at 31.50 (YTD: -48.41%; 5YR: -33.1%)    
Gold ($/ozt) down -3.55 (-0.22%) at 1591.54 (YTD: 4.51%; 5YR: 37.7%)    
Copper ($/mt) down -89.00 (-1.61%) at 5440.00 (YTD: -11.89%; 5YR: -6.9%)    
    
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