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17th April 2020

17/04/2020

Market Data and Morning Chat

Morning Chat

One in ten: Back in 1981, when you filled in Form 40 to collect unemployment benefits, the UK had over one in ten on the dole. It was the same story in the US and they also revisited 10% again in 2009. There have been concerns unemployment’s accelerating now (the US government’s $600-a-week allowance requires being signed-on).  Yesterday saw the initial jobless claims decelerate to 5.25million. It’s still painful and we may see a short-term unemployment spike much higher than 10%, but longer-term estimates remain lower than 10%. Certainly yesterday’s equity markets appeared unpanicked, as they generally posted small gains.

Higher Ground: While other respiratory infections lead to pneumonia-like complications, a fascinating and unique aspect of Covid-19 infections is many patients suffer oxygen starvation more akin to the complications of high-altitude pulmonary edema.  Doctors are learning more like this about the virus every day, including which drugs might be effective treatments.  Gilead’s Remdesivir is an example. The company’s shares were on steroids, rising over 17% in last nights’s aftermarket on news the drug apparently leads to “rapid recoveries in fever and respiratory symptoms”. News like that helped lift the Nasdaq too – which in sterling-terms is now positive for the year!

Food for thought: Investors have to balance two major unknowns – how much economic cuts today leave deep scars to heal tomorrow and how soon before healing begins. Hopefully, the sooner the healing, the shallower the damage.  In the US, Trump’s administration published the “Opening up America Again” guidelines with the President claiming as many as 29 states could “open relatively soon”, though he is known for premature, erm… exclamations. Add Boeing’s aiming to restart Seattle jetliner production next week, LVMH is planning to reopen some production sites and L’Oreal is upbeat on a quick recovery too and sooner, maybe, looks possible.

Certainly today’s equity futures look happier, posting significant 3% and more gains
… even given China reporting a 6.8% decline in GDP and revising up its death toll
… as investors focussed on the economic outlook rather than rear-view numbers
They’re testing times, and Roche (+3.2%) hopes to have its antibody test ready early-May.
LVMH (+0.2%) said sales fell 17% per guidance, but lea[t 50% in China over the last 3 weeks
L’Oreal (-0.6%) similarly stated Q1 sales fell 4.3% but that China sales were already recovering
Abbot Labs (+5.5%) 2.5% year-on-year earnings rise were the right prescription for share gains 
Plus. in line with the other banks, KeyCorp (+0.2%) profits decline on loan provisioning

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +3.15 (+0.27%) at 1,168 (YTD: -15.10%; 5YR: 25.8%)
MSCI AC World Equities (USD) up +18.02 (+0.22%) at 8,372 (YTD: -16.11%; 5YR: 25.9%)
Barclays Global Aggregate Bonds down -0.34 (-0.07%) at 515 (YTD: 0.65%; 5YR: 14.1%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +16.19 (+0.58%) at 2,800 (YTD: -13.35%; 5YR: 34.5%)
NASDAQ up +139.19 (+1.66%) at 8,532 (YTD: -4.91%; 5YR: 73.0%)
Euro STOXX 50 up +4.15 (+0.15%) at 2,812 (YTD: -24.91%; 5YR: -23.5%)
FTSE 100 up +30.78 (+0.55%) at 5,628 (YTD: -25.38%; 5YR: -19.5%)
CAC down -3.56 (-0.08%) at 4,350 (YTD: -27.23%; 5YR: -15.4%)
DAX up +21.78 (+0.21%) at 10,302 (YTD: -22.25%; 5YR: -11.9%)
Nikkei 225  up +537.01 (+2.78%) at 19,827 (YTD: -16.19%; 5YR: 0.9%)
Hang Seng up +583.30 (+2.43%) at 24,590 (YTD: -12.77%; 5YR: -11.1%)
MSCI Emerging Markets down -3.28 (-0.37%) at 885 (YTD: -20.62%; 5YR: -15.1%)
 
Selected Government Bond Yields
US 2 Year up +0.03 at 0.23 (began the year at 1.57; 5 years ago it was 0.51)
US 10 Year up +0.04 at 0.66 (began the year at 1.92; 5 years ago it was 1.87)
UK 10 Year unchanged at 0.30 (began the year at 0.82; 5 years ago it was 1.58)
Germany 10 Year down 0.00 at -0.48 (began the year at -0.19; 5 years ago it was 0.08)
France 10 Year up +0.00 at 0.03 (began the year at 0.12; 5 years ago it was 0.37)
Italy 10 Year down 0.00 at 1.83 (began the year at 1.41; 5 years ago it was 1.47)
Japan 10 Year up +0.00 at 0.01 (began the year at -0.02; 5 years ago it was 0.30)
Barclays EM Basket down -0.02 at 4.10 (began the year at 4.27; 5 years ago it was 4.93)
 
Selected Currencies
$ weakened -0.0036 versus € (-0.33%) at 1.0870 ($: YTD: 3.20%; 5YR: -0.8%)
€ weakened -0.0013 versus £ (+0.11%) at 1.1495 (€: YTD: 2.77%; 5YR: 20.5%)
$ weakened -0.0056 versus £ (-0.45%) at 1.2495 ($: YTD: 5.79%; 5YR: 16.4%)
¥ weakened -0.0200 versus $ (-0.02%) at 107.7400 (¥: YTD: -0.78%; 5YR: 10.4%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.27 (+1.16%) at 23.51 (YTD: -64.60%; 5YR: -61.6%)
WTI Crude ($/bbl) unchanged 0.00 (0.00%) at 19.87 (YTD: -67.46%; 5YR: -65.0%)
Gold ($/ozt) down -7.97 (-0.47%) at 1705.65 (YTD: 12.01%; 5YR: 41.8%)
Copper ($/mt) up +28.50 (+0.56%) at 5140.00 (YTD: -16.75%; 5YR: -15.2%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros