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18th March 2020

18/03/2020

Market Data and Morning Chat

Morning Chat 

We’ll build a Wall … Street: Guess who suggested “It’s going to be big, it’s going to be bold”? US President Donald Trump – with characteristic bluster and imprecision – expounded on the proposed US stimulus package yesterday. He may have flubbed his lines Monday, but, backed up by his skilled understudy Steven Mnuchin, he delivered a message the markets applauded. Announcing £670-£800billion in stimulus including tax cuts, small business assistance and focussed relief to airlines and industry it was hard to miss. The Covid-19-supressing stimulus needs to pass Congress, but in an election year?  No wonder US indices rallied so significantly.

Whatever you want, whatever you need: The US was not the only country announcing assistance packages.  The European stock markets generated reasonable rebounds on the back of the major EU nations offerings as well. The UK’s Chancellor Rishi Sunak, breaking from the usual status quo, announced £330billion various loans and guarantees to support jobs and businesses doing “whatever it takes”. France proposed around £300billion of aid, Spain nearly £100billion, and Germany just over £500billion to combine with the various programmes put forward by the Italians.  Meanwhile, Brussels offered a draft EU proposal to loosen state aid restrictions with unusual ease.

Nothing to sneeze at: In a swirl of losses, you can lose sight of some market highlights. Despite some significant falls in oil, airline and cruise liner stocks, some companies have held their ground. Tissue-maker Kimberley-Clark is up 5% year-to-date and only 3¾% off its 2020 high. Panicked soup purchases have lifted Campbell Soup 11% to a two-year high for canny investors. Regeneron rallied 11.5% yesterday for a 34½% gain this year over news they may have a Covid-19 vaccine (for later this year, maybe) after their success in creating an Ebola treatment. Meanwhile, Ocado’s delivered 8% this year too.

After a rally, it’s not surprising to see futures give some of the gains back as Asia loses ground
… and the key focus looks to be the pace of new cases of Covid-19 as we hit 190,000 infected
CanSino Biologics has received Chinese approval for human trials of Covid-19 vaccine
Remember the Democrats? Biden swept three primaries as many suggest Sanders should quit
Netherlands reversed their closure of coffee shops to thwart rise in illegal marijuana sales    

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +41.26 (+4.07%) at 1,056 (YTD: -23.24%; 5YR: 14.8%)
MSCI AC World Equities (USD) up +298.34 (+4.12%) at 7,534 (YTD: -24.50%; 5YR: 14.6%)
Barclays Global Aggregate Bonds down -8.72 (-1.69%) at 507 (YTD: -0.99%; 5YR: 14.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +143.06 (+6.00%) at 2,529 (YTD: -21.72%; 5YR: 20.5%)    
NASDAQ up +430.19 (+6.23%) at 7,335 (YTD: -18.25%; 5YR: 47.2%)    
Euro STOXX 50 up +80.13 (+3.27%) at 2,531 (YTD: -32.43%; 5YR: -31.0%)    
FTSE 100 up +143.82 (+2.79%) at 5,295 (YTD: -29.80%; 5YR: -23.8%)    
CAC up +110.32 (+2.84%) at 3,992 (YTD: -33.23%; 5YR: -20.7%)    
DAX up +196.85 (+2.25%) at 8,939 (YTD: -32.53%; 5YR: -25.0%)    
Nikkei 225  down -284.98 (-1.68%) at 16,727 (YTD: -29.29%; 5YR: -14.4%)    
Hang Seng down -967.70 (-4.16%) at 22,296 (YTD: -20.91%; 5YR: -7.6%)    
MSCI Emerging Markets down -6.50 (-0.78%) at 827 (YTD: -25.84%; 5YR: -13.6%)    
    
Selected Government Bond Yields    
US 2 Year down -0.05 at 0.44 (began the year at 1.57; 5 years ago it was 0.55)    
US 10 Year up +0.02 at 1.09 (began the year at 1.92; 5 years ago it was 1.92)    
UK 10 Year up +0.12 at 0.55 (began the year at 0.82; 5 years ago it was 1.60)    
Germany 10 Year up +0.10 at -0.34 (began the year at -0.19; 5 years ago it was 0.20)    
France 10 Year up +0.12 at 0.34 (began the year at 0.12; 5 years ago it was 0.47)    
Italy 10 Year up +0.06 at 2.41 (began the year at 1.41; 5 years ago it was 1.31)    
Japan 10 Year up +0.05 at 0.06 (began the year at -0.02; 5 years ago it was 0.36)    
Barclays EM Basket down -0.10 at 4.48 (began the year at 4.27; 5 years ago it was 5.11)
    
Selected Currencies    
$ strengthened +0.0004 versus € (+0.04%) at 1.0984 ($: YTD: 2.18%; 5YR: -3.1%)    
€ strengthened +0.0039 versus £ (-0.36%) at 1.0963 (€: YTD: 7.75%; 5YR: 26.1%)    
$ strengthened +0.0047 versus £ (+0.39%) at 1.2042 ($: YTD: 9.21%; 5YR: 18.3%)    
¥ strengthened +0.1200 versus $ (+0.11%) at 107.2800 (¥: YTD: -1.21%; 5YR: 12.8%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.37 (-1.35%) at 27.00 (YTD: -59.35%; 5YR: -50.3%)    
WTI Crude ($/bbl) down -1.75 (-6.10%) at 26.95 (YTD: -55.86%; 5YR: -38.0%)    
Gold ($/ozt) down -35.70 (-2.33%) at 1499.19 (YTD: -1.55%; 5YR: 30.0%)    
Copper ($/mt) down -146.50 (-2.77%) at 5144.00 (YTD: -16.68%; 5YR: -11.1%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros