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16th April 2020

16/04/2020

Market Data and Morning Chat

Morning Chat

Talking rough numbers: March economic data releases were always going to be difficult. Alongside yesterday’s mostly-inline inflation data – which, let’s face it, is fairly inconsequential right now – investors also saw two big US numbers – retail sales and industrial production. Retail sales were always going to be hit hard – they fell a slightly-more-than-forecast 8.7%.  Clothing sales were pants, falling 50.5% - maybe, working from home, everyone only needs new tops (so not so pants) – while restaurants, furniture, cars and sporting goods all contracted by about a quarter. Meanwhile, industrial production fell 5.4% versus a forecast 4% slippage as factories furloughed workers.

Not just working from home: Then there was the British Retail Consortium’s UK retail sales data which noted that prior to the lockdown, retail sales surged 12% with online non-food purchases up 19%. Britons stocked up on computers (working from home obviously), board games and fitness equipment (for those offline hours) but no mention of toilet paper. Barclaycard data also showed an 80% leap in off-licence & grocery purchases as we made sure sequestration was nothing to wine about. After the lockdown, retail sales fell by a quarter leaving March overall down 3.5%. Still, better than the expected 5,5% decline

Just musing: Amidst these rough numbers equities sold off – not unexpectedly. There’s been an expectation of a significant economic slowing, the IMF using the term the “Great Lockdown Recession” for the GDP slip.  But a what-if. What if the decline of the first quarter is followed by a rebound in the second? Germany’s to allow small stores to reopen next week and schools in May, Italy & Spain are now easing restrictions and Trump’s talking May 1. Australia added 5,900 jobs in March (their lockdown effects likely not show up until April). A recession is two quarters of negative growth. What if we only get one?  

Given yesterday’s declines, Asian equity markets are showing only a slight slip today
… while equity futures have Europe up and the US only down a minimal 0.10% or so
A big signal due to today is US initial jobless claims expected at 5.5million 
Bank of America (-6.9%), Citigroup (-6.1%) & US Bancorp (-7.5%) see lower profits…
… with provisions increase, but maintained dividends & 20% dealing-desk revenue spike-up
Taiwan Semiconductor (-0.4%) chips in a 91% year-on-year rise in earnings to March as their…
… 42% increase in Q1 revenues alone highlights planning for an expected Q2 bounce-back…
… exemplified by Apple dialling up a 19% increase in iPhone sales in March

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -23.00 (-1.94%) at 1,164 (YTD: -15.33%; 5YR: 24.1%)
MSCI AC World Equities (USD) down -198.26 (-2.32%) at 8,354 (YTD: -16.29%; 5YR: 24.4%)
Barclays Global Aggregate Bonds up +0.21 (+0.04%) at 515 (YTD: 0.72%; 5YR: 14.5%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -62.70 (-2.20%) at 2,783 (YTD: -13.85%; 5YR: 32.2%)
NASDAQ down -122.56 (-1.44%) at 8,393 (YTD: -6.46%; 5YR: 67.6%)
Euro STOXX 50 down -109.54 (-3.75%) at 2,808 (YTD: -25.02%; 5YR: -25.1%)
FTSE 100 down -193.66 (-3.34%) at 5,598 (YTD: -25.78%; 5YR: -20.7%)
CAC down -170.19 (-3.76%) at 4,354 (YTD: -27.17%; 5YR: -16.7%)
DAX down -416.80 (-3.90%) at 10,280 (YTD: -22.41%; 5YR: -14.3%)
Nikkei 225  down -259.89 (-1.33%) at 19,290 (YTD: -18.46%; 5YR: -3.0%)
Hang Seng down -186.07 (-0.77%) at 23,959 (YTD: -15.01%; 5YR: -13.6%)
MSCI Emerging Markets down -8.14 (-0.91%) at 888 (YTD: -20.32%; 5YR: -15.6%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.20 (began the year at 1.57; 5 years ago it was 0.48)
US 10 Year down 0.00 at 0.63 (began the year at 1.92; 5 years ago it was 1.89)
UK 10 Year down -0.04 at 0.30 (began the year at 0.82; 5 years ago it was 1.61)
Germany 10 Year up +0.01 at -0.45 (began the year at -0.19; 5 years ago it was 0.08)
France 10 Year up +0.01 at 0.06 (began the year at 0.12; 5 years ago it was 0.35)
Italy 10 Year down -0.03 at 1.85 (began the year at 1.41; 5 years ago it was 1.38)
Japan 10 Year down 0.00 at 0.00 (began the year at -0.02; 5 years ago it was 0.32)
Barclays EM Basket down -0.09 at 4.12 (began the year at 4.27; 5 years ago it was 4.95)
 
Selected Currencies
$ strengthened +0.0027 versus € (+0.25%) at 1.0890 ($: YTD: 3.02%; 5YR: -1.5%)
€ strengthened +0.0018 versus £ (-0.16%) at 1.1468 (€: YTD: 3.01%; 5YR: 21.3%)
$ strengthened +0.0050 versus £ (+0.40%) at 1.2489 ($: YTD: 5.84%; 5YR: 16.3%)
¥ weakened -0.3800 versus $ (-0.35%) at 107.7500 (¥: YTD: -0.77%; 5YR: 10.7%)
 
Selected Commodities

Brent Crude ($/bbl) up +0.17 (+0.77%) at 22.31 (YTD: -66.41%; 5YR: -64.1%)
WTI Crude ($/bbl) down -0.24 (-1.19%) at 19.87 (YTD: -67.46%; 5YR: -64.8%)
Gold ($/ozt) up +4.92 (+0.29%) at 1719.37 (YTD: 12.91%; 5YR: 43.7%)
Copper ($/mt) down -51.50 (-1.00%) at 5111.50 (YTD: -17.21%; 5YR: -14.2%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros