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10th July 2020

10/07/2020

Market Data and Morning Chat

Morning Chat

108 miles short via I-95: Thanks to Covid-19, forecasters expected US initial jobless claims of around 1.38million.  Assuming the claimants observed 2 metre social distancing, the line would stretch 1,714miles from the White House along the Interstate-95 via Tallahassee (State capitol of. Covid-19 hotspot Florida) and on via Interstate-50 to Texas’ capitol Austin (finishing just short on the outskirts near Bastrop). For once, thankfully, estimates overstated the result. The line would end closer to Columbus, Texas, 108 miles from the State Capitol. While an improvement, the line still ends in Texas so not much help lifting yesterday’s equity market sentiment.
 
Closer than the nearest rest area: 
The journey on the I-95/I-50 takes you from the District of Columbia through nine states that together account for just shy of a third of the US population and nearly 30% of the Covid-19 cases to date. Yet yesterday, those same states accounted for over half the new US cases thanks to the surge in Texas and Florida. That’s equivalent to saying every seven miles, one of those claimants would be one of yesterday’s new cases, and every second one from the states you drive through. No wonder the Covid-19 resurgence dampened investor sentiment
 
 So, what could drive today? 
For a start, if more Americans drove from Washington to Austin. The journey would use about 3 barrels of crude oil (the gasoline output anyway) based on the US average 25.1 miles-per-gallon mileage. With oil inventories just up 5.6million barrels, it would take those new jobless claimants driving to Austin and halfway back just to use the increase (helping lift prices and in turn energy stocks). OK, not likely. Otherwise, there’s only French & Italian industrial production on this slow news day, so investors will just have to wait for next week’s earnings season kick-off.  
 
 
As you might therefore expect, futures this morning are running a little lower, off ¼ to ¾%
…and after an 8-day rally, even the Chinese market is slipping back a little today
… as Hong Kong is having to look at shutting schools again over a renewed virus outbreak
Oil prices are more than 3½% down since the inventory build was announced
… meanwhile gold has rallied 1¼% this week cracking the $1,800 mark last seen in 2011
Pepsi will report Monday next week followed by the big US banks Tuesday & Wednesday
President Trump’s approval rating slips to 40.1%, his lowest since February 1 last year
Sign me up – Barbados is planning a “work remotely” plan letting visitors stay for 12-months

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -4.21 (-0.31%) at 1,336 (YTD: -2.82%; 5YR: 46.6%)
MSCI AC World Equities (USD) down -48.52 (-0.50%) at 9,605 (YTD: -3.75%; 5YR: 45.5%)
Barclays Global Aggregate Bonds up +0.80 (+0.15%) at 531 (YTD: 3.76%; 5YR: 20.4%)
 
Selected Equity Indices (Capital returns)

S&P 500 down -17.89 (-0.56%) at 3,152 (YTD: -2.44%; 5YR: 51.8%)
NASDAQ up +55.25 (+0.53%) at 10,548 (YTD: 17.56%; 5YR: 111.1%)
Euro STOXX 50 down -24.92 (-0.76%) at 3,261 (YTD: -12.92%; 5YR: -7.6%)
FTSE 100 down -106.54 (-1.73%) at 6,050 (YTD: -19.79%; 5YR: -9.3%)
CAC down -60.12 (-1.21%) at 4,921 (YTD: -17.68%; 5YR: 0.4%)
DAX down -5.35 (-0.04%) at 12,489 (YTD: -5.73%; 5YR: 10.4%)
Nikkei 225  down -157.32 (-0.70%) at 22,372 (YTD: -5.43%; 5YR: 13.1%)
Hang Seng down -531.13 (-2.03%) at 25,679 (YTD: -8.91%; 5YR: 3.1%)
MSCI Emerging Markets up +9.55 (+0.89%) at 1,080 (YTD: -3.14%; 5YR: 15.7%)
 
Selected Government Bond Yields

US 2 Year down 0.00 at 0.15 (began the year at 1.57; 5 years ago it was 0.64)
US 10 Year down -0.02 at 0.60 (began the year at 1.92; 5 years ago it was 2.40)
UK 10 Year down -0.03 at 0.16 (began the year at 0.82; 5 years ago it was 2.08)
Germany 10 Year up +0.00 at -0.46 (began the year at -0.19; 5 years ago it was 0.90)
France 10 Year down 0.00 at -0.14 (began the year at 0.12; 5 years ago it was 1.28)
Italy 10 Year down 0.00 at 1.22 (began the year at 1.41; 5 years ago it was 2.13)
Japan 10 Year down -0.01 at 0.01 (began the year at -0.02; 5 years ago it was 0.44)
Barclays EM Basket down -0.01 at 3.77 (began the year at 4.27; 5 years ago it was 5.37)
 
Selected Currencies

$ strengthened +0.0021 versus € (+0.19%) at 1.1270 ($: YTD: -0.37%; 5YR: -1.3%)
€ strengthened +0.0002 versus £ (-0.02%) at 1.1166 (€: YTD: 5.79%; 5YR: 24.6%)
$ strengthened +0.0026 versus £ (+0.21%) at 1.2584 ($: YTD: 5.12%; 5YR: 18.7%)
¥ strengthened +0.3700 versus $ (+0.35%) at 106.9400 (¥: YTD: -1.53%; 5YR: 14.9%)
 
Selected Commodities

Brent Crude ($/bbl) down -0.61 (-1.45%) at 41.43 (YTD: -37.62%; 5YR: -28.6%)
WTI Crude ($/bbl) down -1.28 (-3.13%) at 39.62 (YTD: -35.11%; 5YR: -24.9%)
Gold ($/ozt) down -1.73 (-0.10%) at 1798.24 (YTD: 18.09%; 5YR: 55.0%)
Copper ($/mt) up +68.00 (+1.09%) at 6300.00 (YTD: 2.04%; 5YR: 11.9%)
 

Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five-year return
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros