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20th March 2020

20/03/2020

Market Data and Morning Chat

Morning Chat

Staying Stimulated: Yesterday equity futures signalled a steady-state European kick-off. Asia maybe traded down, but Europe had a significant array of governments adding stimulus to the markets. Equities took the bait. A rapid and early rally ensued, but it began to weaken. Meanwhile bond yields started to rise. It was looking like another day of fade. However, US President Donald Trump commented that he could intervene in the Russo-Saudi spat over oil. Oil prices surged to their best one-day gain ever, bond yields retreated and the energy stocks helped lead the European indices back to the day’s highs, up 1½-2½%.

Carry on regarding: As the trading moved across the Atlantic, the rally continued.  Energy stocks, boosted by the gushing oil prices, jumped by 6¾% while utilities slipped back by 5½%. Many individual shares saw even bigger moves – nearly 4% of S&P names rallied more than 20%, including the likes of Noble Energy (+30.5%) & Darden (+24.2%) – both heavily damaged by the oil and coronavirus issues – although airline names remained out of favour. Sterling investors also found the gains – as did any non-dollar investor – bolstered by the surging dollar, highlighting somewhat that the days of wild swings may not be over.

Readying for a change of pace: Meanwhile, over the last few days London’s become a quieter place. Later today, quieter still as schools close for all but the children of critical workers while more work from home.  The UK government is not – for now – imposing strident movement restrictions as has been done in Italy, Spain or Germany, but they will have an impact.  But note, Italy’s quarantine may be starting to pay off. Finger’s crossed. More, the quarantine may also offer opportunities. Home service names – telecoms, games companies like Take Two, streaming services Netflix & Disney and Domino’s pizza may all see increased business.

It took a while to sink in, but the stimulus measures appear to have helped – futures are up again
… meanwhile Asian equities posted gains of 2-4% and the dollar rally eased with the pound up ¢2
… and 10-year bond yields fell back around 0.1% across the board bar in Japan
… though the high-street’s hurting – M&S (+1.5%) reduced guidance on very depressed numbers
… with a surplus unsold seasonal item; they are likely to withhold the final dividend
Italy & Spain now have more Covid-19 recoveries than deaths – that was a good sign for China

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +7.06 (+0.70%) at 1,014 (YTD: -26.24%; 5YR: 9.6%)
MSCI AC World Equities (USD) up +53.96 (+0.75%) at 7,203 (YTD: -27.82%; 5YR: 8.2%)
Barclays Global Aggregate Bonds down -3.89 (-0.78%) at 492 (YTD: -3.90%; 5YR: 9.7%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +11.29 (+0.47%) at 2,409 (YTD: -25.42%; 5YR: 14.3%)    
NASDAQ up +160.73 (+2.30%) at 7,151 (YTD: -20.31%; 5YR: 42.3%)    
Euro STOXX 50 up +68.26 (+2.86%) at 2,454 (YTD: -34.47%; 5YR: -34.1%)    
FTSE 100 up +71.03 (+1.40%) at 5,152 (YTD: -31.70%; 5YR: -26.6%)    
CAC up +100.66 (+2.68%) at 3,856 (YTD: -35.51%; 5YR: -24.2%)    
DAX up +168.72 (+2.00%) at 8,610 (YTD: -35.01%; 5YR: -28.5%)    
Nikkei 225  down -173.72 (-1.04%) at 16,553 (YTD: -30.03%; 5YR: -15.4%)    
Hang Seng up +960.77 (+4.43%) at 22,670 (YTD: -19.58%; 5YR: -7.0%)    
MSCI Emerging Markets down -21.40 (-2.72%) at 766 (YTD: -31.24%; 5YR: -21.0%)    
    
Selected Government Bond Yields    
US 2 Year down -0.03 at 0.42 (began the year at 1.57; 5 years ago it was 0.58)    
US 10 Year down -0.11 at 1.03 (began the year at 1.92; 5 years ago it was 1.93)    
UK 10 Year down -0.07 at 0.72 (began the year at 0.82; 5 years ago it was 1.52)    
Germany 10 Year down -0.09 at -0.28 (began the year at -0.19; 5 years ago it was 0.18)
France 10 Year down -0.11 at 0.12 (began the year at 0.12; 5 years ago it was 0.44)    
Italy 10 Year down -0.22 at 1.52 (began the year at 1.41; 5 years ago it was 1.20)    
Japan 10 Year unchanged at 0.06 (began the year at -0.02; 5 years ago it was 0.32)    
Barclays EM Basket up +0.18 at 4.88 (began the year at 4.27; 5 years ago it was 5.05)
    
Selected Currencies    

$ weakened -0.0130 versus € (-1.22%) at 1.0814 ($: YTD: 3.70%; 5YR: 0.3%)    
€ weakened -0.0116 versus £ (+1.06%) at 1.0932 (€: YTD: 8.06%; 5YR: 26.2%)    
$ weakened -0.0266 versus £ (-2.30%) at 1.1821 ($: YTD: 10.87%; 5YR: 21.0%)    
¥ strengthened +0.9700 versus $ (+0.89%) at 109.4100 (¥: YTD: 0.76%; 5YR: 9.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +1.78 (+6.79%) at 28.00 (YTD: -57.84%; 5YR: -47.4%)    
WTI Crude ($/bbl) up +4.85 (+23.81%) at 25.22 (YTD: -58.70%; 5YR: -42.6%)    
Gold ($/ozt) up +35.99 (+2.44%) at 1508.27 (YTD: -0.96%; 5YR: 27.3%)    
Copper ($/mt) up +80.00 (+1.69%) at 4825.00 (YTD: -21.85%; 5YR: -17.6%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros