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14th July 2020

14/07/2020

Market Data and Morning Chat

Morning Chat

Land of Confusion: Fast as they floated, cruise lines sunk, led yesterday by Carnival (-5.5%) as the worrying pace of cases coming from the invisible touch of Covid-19 was again dampening investor sentiment.  US equities were riding a gain until New York lunchtime, but within 4½hours of the S&P turning positive for the year (again – it did so June 8th too), the market was sliding.  No doubt worry about the upcoming earnings season also hurt, although Pepsi provided the first numbers to crunch and they were better-than-expected as snack-foods more than filled the gap left by fizz-less soft drink sales.  
 
 
Turn it on again: 
This side of the Atlantic shut before the US started to fade so markets closed on a gain. Sure, there was a EU-specific boost coming from the 180-day delay of the US tariffs on French luxury brands as Kering (+2.4%) & LVMH (+1.9%) gained, but L’Oreal (-0.3%) didn’t.  There was a decided lift on anything travel-related, with Amadeus (+6.0%), Safran (4.0%) and Airbus (+3.7%) flying, no doubt after US travel stocks gained Friday, so they might lose a little altitude today.  Hopefully, at least the healthcare gains on positive Covid-19 treatment news should be more resilient.
 
 Anything she does… …will it be enough? German Chancellor Merkel is holding numerous face-to-face meetings before Friday’s EU leaders’ conference to rally support for the region’s coronavirus fund; she met with Italy’s Prime Minister Conte yesterday.  Despite the €750billion plan having its genesis in the early days of the European pandemic, it remains the last major fiscal policy response on the drawing board as a number of net payers have objected. New budget rebates may facilitate a deal, but Hungary’s Victor Orban and Poland’s newly re-elected Duda will likely require Brussels to cease objections to their populist plans to acquiesce. 
  
Somewhat as expected, European equity futures are giving back much of yesterday’s gains
 
… with Asia trading down, but at least US futures are pointing to a slight upswing
 
UK rebounded less than hoped – May GDP was up only 1.8% versus 5.5% forecast…
 
… due to a weaker-than-expected services pick-up of 0.9% versus the 4.8% predicted…
 
… and construction only built up by 8.2% versus the 15.0% hoped for, but at least…
 
… manufacturing production rose by 8.4% versus the 7.8% analysts had forecast
 
US-China tensions tightened as US called South China Sea claim unlawful in line with UN ruling
 
Meanwhile, Macau’s easing lockdown boosted big gambling firms like Wynn’s (+9.6%)
 
… but Singapore saw it’s GDP shrink by 41.2% versus the same period last year
 
 Oil edged down on anticipation production cuts may be watered down at upcoming OPEC+ 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -2.92 (-0.22%) at 1,341 (YTD: -2.49%; 5YR: 44.7%)
MSCI AC World Equities (USD) down -25.00 (-0.26%) at 9,661 (YTD: -3.19%; 5YR: 44.2%)
Barclays Global Aggregate Bonds down -0.47 (-0.09%) at 531 (YTD: 3.76%; 5YR: 20.9%)
 
Selected Equity Indices (Capital returns)

S&P 500 down -29.82 (-0.94%) at 3,155 (YTD: -2.34%; 5YR: 49.6%)
NASDAQ down -226.60 (-2.13%) at 10,391 (YTD: 15.81%; 5YR: 103.5%)
Euro STOXX 50 up +53.78 (+1.63%) at 3,350 (YTD: -10.55%; 5YR: -7.1%)
FTSE 100 up +80.78 (+1.33%) at 6,176 (YTD: -18.11%; 5YR: -8.6%)
CAC up +85.75 (+1.73%) at 5,056 (YTD: -15.42%; 5YR: 0.5%)
DAX up +166.26 (+1.32%) at 12,800 (YTD: -3.39%; 5YR: 11.1%)
Nikkei 225  down -209.74 (-0.92%) at 22,575 (YTD: -4.57%; 5YR: 10.7%)
Hang Seng down -409.87 (-1.59%) at 25,362 (YTD: -10.03%; 5YR: 1.0%)
MSCI Emerging Markets up +2.09 (+0.20%) at 1,071 (YTD: -3.88%; 5YR: 13.9%)
 
Selected Government Bond Yields

US 2 Year up +0.00 at 0.16 (began the year at 1.57; 5 years ago it was 0.64)
US 10 Year up +0.01 at 0.63 (began the year at 1.92; 5 years ago it was 2.40)
UK 10 Year up +0.03 at 0.19 (began the year at 0.82; 5 years ago it was 2.12)
Germany 10 Year down -0.02 at -0.44 (began the year at -0.19; 5 years ago it was 0.84)
France 10 Year down -0.01 at -0.12 (began the year at 0.12; 5 years ago it was 1.22)
Italy 10 Year up +0.00 at 1.24 (began the year at 1.41; 5 years ago it was 2.06)
Japan 10 Year down -0.01 at 0.02 (began the year at -0.02; 5 years ago it was 0.45)
Barclays EM Basket down 0.00 at 3.75 (began the year at 4.27; 5 years ago it was 5.37)
 
Selected Currencies

$ strengthened +0.0027 versus € (+0.24%) at 1.1341 ($: YTD: -1.00%; 5YR: -3.0%)
€ strengthened +0.0039 versus £ (-0.35%) at 1.1058 (€: YTD: 6.83%; 5YR: 28.0%)
$ strengthened +0.0073 versus £ (+0.58%) at 1.2541 ($: YTD: 5.44%; 5YR: 19.5%)
¥ weakened -0.1000 versus $ (-0.09%) at 107.2700 (¥: YTD: -1.22%; 5YR: 15.0%)
 
Selected Commodities

Brent Crude ($/bbl) up +0.05 (+0.12%) at 42.03 (YTD: -36.72%; 5YR: -27.2%)
WTI Crude ($/bbl) down -0.45 (-1.11%) at 40.10 (YTD: -34.33%; 5YR: -23.2%)
Gold ($/ozt) down -10.07 (-0.56%) at 1799.78 (YTD: 18.19%; 5YR: 55.8%)
Copper ($/mt) up +159.00 (+2.48%) at 6571.00 (YTD: 6.43%; 5YR: 17.5%)
 
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