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14th February 2020

14/02/2020

Market Data and Morning Chat

Morning Chat

Dropping a card in the reshuffle: Boris Johnson reshuffled his Cabinet and played for a trick he couldn’t keep.  Chancellor Sajid Javid was told to choose between his advisors or his job. He chose the latter rather than be seen as a “Chino” – Chancellor in name only – thus leading Treasury #2 Rishi Sunak to becoming the new occupant of 11 Downing Street and rattling the pound. With the budget due within weeks, it beggared if mooted possible policies such as the mansion tax and pension relief reform were a hand dealt by fiscal hawk Javid or high-spending Johnson and advisor Cummings.

Moving the confirmation goalposts: Until yesterday, health authorities in Hubei province – the focal point of the coronavirus outbreak - only confirmed cases of Covid-19 by time-consuming nucleic acid tests. Now they have also opted to confirm cases by CT scan, and in doing so added over 13,000 cases to those recorded, shocking the markets and triggering a small sell-off.  The problem is deciding if the new cases are old ones boosting the levels we know about, or new ones discovered early. Time will tell, but it does keep the Covid-19 worries alive just as the news was beginning to improve.

A new hope: Amazon pulled off a JEDI-kind trick as a US Federal court judge ordered a temporary injunction against Microsoft over the Joint Enterprise Defense Infrastructure cloud computing contract they secured last October.  The judgement is unusually sealed, but Amazon alleges bias on the part of Donald Trump in the government’s award of the contract worth about $1billion a year over 10 years (no wonder Amazon feels they missed out).  Moreover, it challenges the primacy of Amazon’s AWS division (Amazon Web Services) in cloud computing lending greater strength to Microsoft Azure. Amazon shares rose 0.7% while Microsoft’s lost 0.3%.

Maybe because it’s Friday, maybe because the Covid-19 numbers moderated, but futures are up
German Q4 was hoped to be +0.1%, but actually rounded to +0.0% - Q3 was revised up though
Credit Agricole (+0.8%) & RBS (+0.3%) gave a better account of themselves with good earnings
… Oh, and the Royal Bank of Scotland parent company is to be renamed NatWest Group
Renault (+0.0%) likely to swerve today as they announce a dividend cut and weak Nissan sales
Wirecard (-0.1%) announced earnings ahead of estimates but still await independent audit
Mattel (+2.7%) sales miss but they weren’t just toying around with cost cutting as profits rise
Nvidia (+5.2%) chips in their good news – Revenue beat and the 2020 outlook very robust   
… and now, a short hiatus for half-term – the Morning Chat returns Monday, February 24th

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -2.42 (-0.17%) at 1,425 (YTD: 3.62%; 5YR: 58.1%)
MSCI AC World Equities (USD) down -17.64 (-0.17%) at 10,301 (YTD: 3.22%; 5YR: 57.2%)
Barclays Global Aggregate Bonds down -0.09 (-0.02%) at 513 (YTD: 0.35%; 5YR: 13.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -5.51 (-0.16%) at 3,374 (YTD: 4.43%; 5YR: 60.9%)    
NASDAQ down -13.99 (-0.14%) at 9,712 (YTD: 8.24%; 5YR: 98.5%)    
Euro STOXX 50 down -7.69 (-0.20%) at 3,847 (YTD: 2.71%; 5YR: 11.6%)    
FTSE 100 down -82.34 (-1.09%) at 7,452 (YTD: -1.20%; 5YR: 8.4%)    
CAC down -11.59 (-0.19%) at 6,093 (YTD: 1.93%; 5YR: 28.0%)    
DAX down -4.35 (-0.03%) at 13,745 (YTD: 3.75%; 5YR: 25.4%)    
Nikkei 225  down -140.14 (-0.59%) at 23,688 (YTD: 0.13%; 5YR: 32.2%)    
Hang Seng up +95.77 (+0.35%) at 27,826 (YTD: -1.29%; 5YR: 12.7%)    
MSCI Emerging Markets down -3.63 (-0.33%) at 1,106 (YTD: -0.77%; 5YR: 12.1%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.44 (began the year at 1.57; 5 years ago it was 0.64)    
US 10 Year down -0.01 at 1.61 (began the year at 1.92; 5 years ago it was 2.05)    
UK 10 Year up +0.04 at 0.65 (began the year at 0.82; 5 years ago it was 1.68)    
Germany 10 Year up +0.00 at -0.38 (began the year at -0.19; 5 years ago it was 0.34)    
France 10 Year up +0.00 at -0.14 (began the year at 0.12; 5 years ago it was 0.64)    
Italy 10 Year up +0.02 at 0.92 (began the year at 1.41; 5 years ago it was 1.60)    
Japan 10 Year up +0.01 at -0.03 (began the year at -0.02; 5 years ago it was 0.42)    
Barclays EM Basket down 0.00 at 3.97 (began the year at 4.27; 5 years ago it was 5.08)
    
Selected Currencies    
$ strengthened +0.0004 versus € (+0.04%) at 1.0838 ($: YTD: 3.48%; 5YR: 5.0%)    
€ weakened -0.0003 versus £ (+0.02%) at 1.2044 (€: YTD: -1.92%; 5YR: 12.1%)    
$ strengthened +0.0004 versus £ (+0.03%) at 1.3052 ($: YTD: 1.59%; 5YR: 15.2%)    
¥ weakened -0.0500 versus $ (-0.05%) at 109.8200 (¥: YTD: 1.13%; 5YR: 8.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) unchanged 0.00 (0.00%) at 56.38 (YTD: -15.12%; 5YR: -5.1%)    
WTI Crude ($/bbl) up +0.25 (+0.49%) at 51.42 (YTD: -15.79%; 5YR: -2.6%)    
Gold ($/ozt) down -2.20 (-0.14%) at 1574.46 (YTD: 3.39%; 5YR: 28.0%)    
Copper ($/mt) up +26.00 (+0.45%) at 5790.00 (YTD: -6.22%; 5YR: 1.0%)    

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros