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14th April 2020

14/04/2020

Market Data and Morning Chat

Morning Chat

Don’t you remember? Four days off enjoying a sunny Easter – even sequestered – is enough to make last week, the third under lockdown, seem an age away. Yet it’s worth recalling as markets had a good week.  Solid gains across the UK, Europe and US saw equities generate a weekly gain around 7%.  Gilt – government bonds – yields fell 0.1% across the long duration issues, and still saw some yield slippage at shorter-end too so generating some capital gains. Gold rallied over 6% to an 8-year high and sterling – briefly sliding on news Boris Johnson was admitted to ICU – also rallied 1¼%

A remedy is oil I ask: Every story has its scars, and the oil market has been suffering from the sudden lockdown-induced demand decline and the shattering of the OPEC+ production agreement.  Last week’s rumblings over a deal already knocked $5 off oil prices with inventories having already gushed up. However, the 12-month agreement over a 9.7million barrels per day cut (the “missing” 0.3 million being a roll-back on Mexico’s share) ought to help over time.  No, the cut does not fully offset the current demand decline, but should reduce the excess as lockdowns ease and, presumably, global demand recovers.  

Rumour has it: Haven’t you heard, Asian indications are gold, oil and sterling (benefitting from Johnson’s recovery) are rising. Covid-19 case trends are looking better, with Spain and Italy looking to ease lockdown restrictions – even the New York-region Governors are debating an easing timetable, but that seems premature. What we can look forward to is the Q1 earnings season – which may give a bit of a rocky ride – kick-off with the banks and Johnson & Johnson today.  Economically, tomorrow’s inflation data will probably have little effect, but the US & EU industrial production could as might this week’s jobless claims.

After the down day in the US Easter Monday, equity futures are signalling an upswing today
… Oil companies, Netflix (+7.0%) and Amazon (6.2%) topped yesterday’s gains while
… Cruise lines, Airlines & Harley Davidson (-9.0%) transported themselves to the bottom
Hopefully Johnson & Johnson will be just the drug for earnings season as they announce first
… Over the last 2 years they have beaten earnings estimates 100% of the time.
… Wells Fargo, JP Morgan and a host of smaller European companies also announce
China sports trade reports showed Mach imports down only 0.6%, exports only down 6.6%
… that’s much better than down respective -9.8% / -13.9% that analyst estimates purports


Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -8.83 (-0.75%) at 1,161 (YTD: -15.56%; 5YR: 24.1%)
MSCI AC World Equities (USD) down -64.67 (-0.77%) at 8,338 (YTD: -16.45%; 5YR: 24.6%)
Barclays Global Aggregate Bonds up +1.14 (+0.22%) at 514 (YTD: 0.38%; 5YR: 14.3%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -28.19 (-1.01%) at 2,762 (YTD: -14.52%; 5YR: 31.8%)
NASDAQ up +38.85 (+0.48%) at 8,192 (YTD: -8.70%; 5YR: 64.6%)
Euro STOXX 50 up +41.52 (+1.46%) at 2,893 (YTD: -22.76%; 5YR: -24.2%)
FTSE 100 up +164.93 (+2.90%) at 5,843 (YTD: -22.54%; 5YR: -17.6%)
CAC up +64.10 (+1.44%) at 4,507 (YTD: -24.61%; 5YR: -14.0%)
DAX up +231.85 (+2.24%) at 10,565 (YTD: -20.26%; 5YR: -14.6%)
Nikkei 225  up +517.71 (+2.72%) at 19,561 (YTD: -17.31%; 5YR: -1.7%)
Hang Seng up +165.53 (+0.68%) at 24,466 (YTD: -13.21%; 5YR: -10.3%)
MSCI Emerging Markets down -5.02 (-0.56%) at 883 (YTD: -20.77%; 5YR: -14.8%)
 
Selected Government Bond Yields
US 2 Year up +0.01 at 0.25 (began the year at 1.57; 5 years ago it was 0.51)
US 10 Year down 0.00 at 0.77 (began the year at 1.92; 5 years ago it was 1.90)
UK 10 Year unchanged at 0.31 (began the year at 0.82; 5 years ago it was 1.51)
Germany 10 Year down 0.00 at -0.35 (began the year at -0.19; 5 years ago it was 0.14)
France 10 Year down 0.00 at 0.10 (began the year at 0.12; 5 years ago it was 0.41)
Italy 10 Year down 0.00 at 1.59 (began the year at 1.41; 5 years ago it was 1.31)
Japan 10 Year down 0.00 at 0.01 (began the year at -0.02; 5 years ago it was 0.32)
Barclays EM Basket down -0.04 at 4.24 (began the year at 4.27; 5 years ago it was 4.95)
 
Selected Currencies
$ weakened -0.0023 versus € (-0.21%) at 1.0940 ($: YTD: 2.57%; 5YR: -2.6%)
€ weakened -0.0014 versus £ (+0.12%) at 1.1481 (€: YTD: 2.89%; 5YR: 20.8%)
$ weakened -0.0041 versus £ (-0.33%) at 1.2560 ($: YTD: 5.30%; 5YR: 15.0%)
¥ weakened -0.1200 versus $ (-0.11%) at 107.7000 (¥: YTD: -0.82%; 5YR: 10.8%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.40 (+1.48%) at 27.45 (YTD: -58.67%; 5YR: -52.3%)
WTI Crude ($/bbl) down -0.35 (-1.54%) at 22.41 (YTD: -63.30%; 5YR: -56.8%)
Gold ($/ozt) down -1.79 (-0.10%) at 1712.37 (YTD: 12.45%; 5YR: 43.5%)
Copper ($/mt) up +17.00 (+0.34%) at 5019.50 (YTD: -18.70%; 5YR: -16.3%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros