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21st April 2020

21/04/2020

Market Data and Morning Chat

Morning Chat

Over a barrel: 2020 saw another historic first as the spot or current West Texas Intermediate (WTI) oil price fell into negative territory. Unbelievable! WTI, a light crude delivered inland at Cushing, Texas, tends to be freer from global geopolitical effects, but suffers storage & transport costs versus North Sea Brent’s easier transport issues & increased geopolitics. However, with Cushing storage looking near capacity and fears refiners will reduce operations, Texan oil barons are paying to have the black gold taken off their hands. Future prices are higher, with June’s price at $20, so if you have some space …

No energy in oil stocks? While European equities closed up, the WTI news did crudely force the US down.  But, interestingly, between the OPEC+ agreement blow-out March 8th & onset of the oil price tumble to the March 23rd equity market low, energy stocks fell over 42% (the worst sector overall) versus 25% for equities overall in dollar terms (add back, say, 9% for sterling). Ouch! Yet, since then, energy stocks have been pumped – even after last night’s oil price crash – and have been the best global sector, up nearly 35% versus equities 25% (less, again, 9% for sterling).  Well, well!

A quick health check: As Covid-19 monopolises headlines, one might have expect the strongest sector to be either healthcare or Amazon-led consumer discretionaries  Well, Amazon, since the market low, has only managed being a market performer.  As noted, energy stocks have led – US oil company Apache having doubled since the low – but global healthcare’s been stellar, rising by over a third to be only 1% down year-to-date!  Led by the likes of Regeneron, Gilead, Qiagen and, more recently, Johnson & Johnson, the sector’s rallied on Covid-19 treatment hopes and has so far seen the best April gain in over 30 years.

Equity futures rose as WTI rallied back from its shock lows, but slipped back to negative now
… As for WTI, the May delivery just seeped back to positive for the contract’s last trading day
Covid-19 news is improving with global cases down in three of last four days
UK 3-month to February unemployment rate rose from the 45-year low 3.9% to 4.0%
Oil service company Halliburton (+1.2%) had a better Q1 than expected on cost cutting
IBM (-2.9%) meanwhile saw sales hit by Covid-19 and pulled their 2020 guidance

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -12.29 (-1.03%) at 1,184 (YTD: -13.89%; 5YR: 26.6%)
MSCI AC World Equities (USD) down -100.03 (-1.16%) at 8,499 (YTD: -14.84%; 5YR: 26.8%)
Barclays Global Aggregate Bonds down -0.62 (-0.12%) at 515 (YTD: 0.59%; 5YR: 14.4%)
 
Selected Equity Indices (Capital returns)

S&P 500 down -51.40 (-1.79%) at 2,823 (YTD: -12.62%; 5YR: 34.6%)
NASDAQ down -89.41 (-1.03%) at 8,561 (YTD: -4.59%; 5YR: 70.7%)
Euro STOXX 50 up +21.20 (+0.73%) at 2,910 (YTD: -22.31%; 5YR: -21.8%)
FTSE 100 up +25.87 (+0.45%) at 5,813 (YTD: -22.93%; 5YR: -17.7%)
CAC up +29.29 (+0.65%) at 4,528 (YTD: -24.25%; 5YR: -12.8%)
DAX up +50.12 (+0.47%) at 10,676 (YTD: -19.42%; 5YR: -10.6%)
Nikkei 225  down -425.89 (-2.17%) at 19,243 (YTD: -18.66%; 5YR: -3.3%)
Hang Seng down -533.83 (-2.19%) at 23,796 (YTD: -15.59%; 5YR: -14.6%)
MSCI Emerging Markets down -1.99 (-0.22%) at 899 (YTD: -19.32%; 5YR: -13.7%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.20 (began the year at 1.57; 5 years ago it was 0.52)
US 10 Year down -0.01 at 0.60 (began the year at 1.92; 5 years ago it was 1.91)
UK 10 Year up +0.03 at 0.34 (began the year at 0.82; 5 years ago it was 1.57)
Germany 10 Year up +0.00 at -0.45 (began the year at -0.19; 5 years ago it was 0.10)
France 10 Year up +0.00 at 0.07 (began the year at 0.12; 5 years ago it was 0.37)
Italy 10 Year up +0.00 at 1.94 (began the year at 1.41; 5 years ago it was 1.45)
Japan 10 Year up +0.00 at 0.02 (began the year at -0.02; 5 years ago it was 0.31)
Barclays EM Basket down -0.07 at 3.99 (began the year at 4.27; 5 years ago it was 4.95)
 
Selected Currencies
$ strengthened +0.0037 versus € (+0.34%) at 1.0833 ($: YTD: 3.53%; 5YR: -0.7%)
€ strengthened +0.0016 versus £ (-0.14%) at 1.1451 (€: YTD: 3.16%; 5YR: 21.5%)
$ strengthened +0.0061 versus £ (+0.49%) at 1.2404 ($: YTD: 6.48%; 5YR: 17.1%)
¥ strengthened +0.2100 versus $ (+0.20%) at 107.4600 (¥: YTD: -1.04%; 5YR: 11.2%)
 
Selected Commodities

Brent Crude ($/bbl) up +0.49 (+2.15%) at 23.30 (YTD: -64.92%; 5YR: -60.7%)
WTI Crude ($/bbl) down -55.90 (-305.97%) at -37.63 (YTD: -161.63%; 5YR: -166.7%)
Gold ($/ozt) down -3.81 (-0.22%) at 1690.78 (YTD: 11.03%; 5YR: 40.6%)
Copper ($/mt) down -27.50 (-0.53%) at 5183.50 (YTD: -16.04%; 5YR: -13.3%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros