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14th September 2020

14/09/2020

Market Data and Morning Chat

The award for best weekly equity return, local currency, goes to…: UK equities! OK, not really, Namibian and South African equity indices were stronger, but otherwise Blighty beat  by rising 4.0% on solid gains like Aviva’s +10.8%, Experian’s +10.3% and investment trust Scottish Mortgage’s +10.3%.  The Americans even tried to rig it – Tesla & Apple, Scottish Mortgage’s biggest holdings fell, but Scottish Mortgage rose because investors priced the trust closer to its true value – in market parlance the discount narrowed.  Yes, chuck in the heavy fall in sterling and the UK’s just part of the European herd, but hey, still up.

…but if Tesla & Apple were down?
 Did I mention sterling fell? The 2¾% & 3¼% slide versus the dollar and euro meant international returns for UK investors were actually boosted.  European equities managed 1¼ to 2¼% local gains over the week, but they look brighter here.  Meanwhile, yes, the US declined a second week running led by the 5¼% Nasdaq tumble… and yes, Apple & Tesla slipped, but only to their 50-day moving average – a sign of their prior exuberance and remaining strength. It’s relative unknowns like pharma-cos EvoFem Biosciences (-41.3%), Satsuma (-79.0%) & Corbus (-80.0%) that really tumbled.

… and the awards next week?
 Possibly “Highest Industrial Production”? Daily this week sees some country or other announce industrial production data for either July (Japan & Italy) or August (others). Japan’s just came in at 8.7% when 8.0% was expected, so a good start.  Hopefully others come in as optimistically. Maybe “Most Helpful Central Bank”? We’ve the Fed, and the Banks of England, Brazil & Japan all announcing their plans. Then there’s a mix of retail sales data (hopefully the UK beats the ½% forecast), some inflation data. UK unemployment (4.1% unemployment forecast) & US jobless claims (830K expected).

News the Oxford Covid-19 vaccine trials are resuming have been a booster shot for markets…
 … as equity futures are fighting fit almost across the board with the US +1½% & Europe +½%
 Well, oil prices are strengthening, albeit marginally, in advance of this week’s OPEC+ meeting
 In case you’re wondering about gold, the shine hasn’t gone as it’s held at c.$1948 for a month
 Japanese capacity utilization improved faster than forecast, but it’s still -15.5% since last year
 Mergers & takeovers are in the air – Nvidia’s buying UK-based ARM from Softbank
 …Softbank (+9.3%) lifted ARM for £24billion in 2016 & will hand it on for £31billion, a 30% profit
 … Gilead has agreed to buy breast cancer therapy maker for Immunomedics for $21 billion
 …& TikTok has agreed to partner its US division with Oracle – though no one’s commenting yet
 … maybe they’re still prepping the information videos – your nearest teenager may know more

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Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +2.30 (+0.17%) at 1,396 (YTD: 1.49%; 5YR: 64.1%)
MSCI AC World Equities (USD) up +1.76 (+0.02%) at 10,181 (YTD: 2.02%; 5YR: 65.3%)
Barclays Global Aggregate Bonds up +0.16 (+0.03%) at 542 (YTD: 5.86%; 5YR: 21.2%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +1.78 (+0.05%) at 3,341 (YTD: 3.41%; 5YR: 71.1%)
NASDAQ down -66.05 (-0.60%) at 10,854 (YTD: 20.96%; 5YR: 125.8%)
Dow Jones Industrial up +131.06 (+0.48%) at 27,666 (YTD: -3.06%; 5YR: 69.0%)
Euro STOXX 50 up +3.04 (+0.09%) at 3,316 (YTD: -11.46%; 5YR: 4.4%)
FTSE 100 up +28.77 (+0.48%) at 6,032 (YTD: -20.02%; 5YR: -0.9%)
CAC up +10.21 (+0.20%) at 5,034 (YTD: -15.79%; 5YR: 11.4%)
DAX down -6.05 (-0.05%) at 13,203 (YTD: -0.35%; 5YR: 30.3%)
Nikkei 225  up +152.81 (+0.65%) at 23,559 (YTD: -0.41%; 5YR: 31.1%)
Hang Seng up +156.73 (+0.64%) at 24,660 (YTD: -12.52%; 5YR: 14.4%)
MSCI Emerging Markets up +6.48 (+0.60%) at 1,092 (YTD: -2.05%; 5YR: 35.2%)
 
Selected Government Bond Yields
US 2 Year up +0.00 at 0.13 (began the year at 1.57; 5 years ago it was 0.73)
US 10 Year down 0.00 at 0.66 (began the year at 1.92; 5 years ago it was 2.18)
UK 10 Year down -0.05 at 0.18 (began the year at 0.82; 5 years ago it was 1.85)
Germany 10 Year down 0.00 at -0.49 (began the year at -0.19; 5 years ago it was 0.65)
France 10 Year down -0.01 at -0.20 (began the year at 0.12; 5 years ago it was 1.06)
Italy 10 Year up +0.05 at 1.03 (began the year at 1.41; 5 years ago it was 1.85)
Japan 10 Year down -0.01 at 0.02 (began the year at -0.02; 5 years ago it was 0.36)
Barclays EM Basket up +0.00 at 3.77 (began the year at 4.27; 5 years ago it was 5.49)
 
Selected Currencies
$ weakened -0.0008 versus € (-0.07%) at 1.1845 ($: YTD: -5.49%; 5YR: -4.6%)
€ weakened -0.0017 versus £ (+0.16%) at 1.0821 (€: YTD: 9.17%; 5YR: 25.9%)
$ weakened -0.0029 versus £ (-0.23%) at 1.2818 ($: YTD: 3.36%; 5YR: 16.9%)
¥ strengthened +0.1100 versus $ (+0.10%) at 106.0500 (¥: YTD: -2.39%; 5YR: 13.2%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.06 (+0.15%) at 39.06 (YTD: -41.19%; 5YR: -14.2%)
WTI Crude ($/bbl) up +0.03 (+0.08%) at 37.33 (YTD: -38.86%; 5YR: -16.4%)
Gold ($/ozt) up +2.99 (+0.15%) at 1945.69 (YTD: 27.77%; 5YR: 75.3%)
Copper ($/mt) up +70.50 (+1.06%) at 6739.00 (YTD: 9.15%; 5YR: 25.5%)
 
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