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22nd April 2020

22/04/2020

Market Data and Morning Chat

Morning Chat

Double, double, oil and trouble: For a second day running, investors focused on oil prices. The May West Texas Intermediate (WTI) futures contract may have drilled down into negative territory Monday thanks to market mechanics, but yesterday saw the June WTI contract slide down as low as $6.50 before doubling back up to $13 or so as storage capacity remains an issue. However, the Brent price was also driven down and global equity markets took a defensive turn as they gave back some recent gains – utilities, real estate and staples sliding the least, tech, finance and communication services the most. 

But now I am cabined, cribbed, confined: Covid-19 meanwhile took more of a backseat for markets. Certainly the tragic death toll remained desperately saddening, but increasingly there’s a consideration over the timing, extent and conditions surrounding the easing of lockdowns as case numbers improve. Even here in the UK the trend’s been turning, although adding care home fatalities to the tally caused a spike in reported deaths. Meanwhile, the Netherlands, Germany, Austria, Italy and others are all looking to lift restrictions and ease some of the economic pain. Given rising corporate financial anxieties and hardships, they need looking after too.

Sleep shall neither night nor day: Netflix has one more binge to play. Netflix shares had a volatile day, at one point up over 10%, but they closed down 0.1% - effectively flat when the markets were down.  The performance was driven by the strong 15.8miillion quarterly jump in subscribers – double the expected number – and Netflix posting a positive free cash flow for the first time in six years although revenues and earnings were more in keeping with expectations. Alongside the Disney+ numbers and altered shopping patterns it points to a significant shift in consumer spending during the Covid-19 sequester.

Equity futures appear to be rising from the ashes of yesterday’s tragedy albeit only slightly
… with the June WTI now hovering at $11½  and Brent at a 21-year low just under $15
… or a quarter the needed level for Saudis to balance their budget (they mainly trade Brent) 
Snapchat (+20.5% aftermarket) earnings crackle on record jump in users as shares pop 
Texas Instruments (-4.2%) calculated stockpiling drove strong Q1 sales but outlook foggy
Lockheed Martin (-2.1%) fires off solid Q1 with cash flow up 39% and outlook somewhat normal 
Emerson Electric (-0.3%) sales down 7% on Covid-19 but does see surge in medical devices
Canadian Pacific (-1.0%) revenues up 16% and volume guidance only slightly off-track 
Kering, Roche , ST Micro & Ericsson report today 


 
Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -33.21 (-2.80%) at 1,151 (YTD: -16.30%; 5YR: 22.7%)
MSCI AC World Equities (USD) down -262.59 (-3.09%) at 8,236 (YTD: -17.47%; 5YR: 22.6%)
Barclays Global Aggregate Bonds down -0.71 (-0.14%) at 514 (YTD: 0.45%; 5YR: 14.6%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -86.60 (-3.07%) at 2,737 (YTD: -15.30%; 5YR: 29.8%)
NASDAQ down -297.50 (-3.48%) at 8,263 (YTD: -7.91%; 5YR: 64.1%)
Euro STOXX 50 down -118.16 (-4.06%) at 2,791 (YTD: -25.47%; 5YR: -25.1%)
FTSE 100 down -171.80 (-2.96%) at 5,641 (YTD: -25.21%; 5YR: -19.7%)
CAC down -170.84 (-3.77%) at 4,357 (YTD: -27.11%; 5YR: -16.4%)
DAX down -426.05 (-3.99%) at 10,250 (YTD: -22.64%; 5YR: -13.6%)
Nikkei 225  down -229.46 (-1.19%) at 19,051 (YTD: -19.47%; 5YR: -5.4%)
Hang Seng down -69.94 (-0.29%) at 23,724 (YTD: -15.84%; 5YR: -15.1%)
MSCI Emerging Markets down -21.09 (-2.34%) at 878 (YTD: -21.21%; 5YR: -16.2%)
 
Selected Government Bond Yields
US 2 Year down -0.01 at 0.19 (began the year at 1.57; 5 years ago it was 0.54)
US 10 Year down -0.02 at 0.55 (began the year at 1.92; 5 years ago it was 1.98)
UK 10 Year down -0.04 at 0.30 (began the year at 0.82; 5 years ago it was 1.71)
Germany 10 Year up +0.00 at -0.48 (began the year at -0.19; 5 years ago it was 0.16)
France 10 Year up +0.00 at 0.07 (began the year at 0.12; 5 years ago it was 0.41)
Italy 10 Year down 0.00 at 2.15 (began the year at 1.41; 5 years ago it was 1.39)
Japan 10 Year down -0.02 at -0.01 (began the year at -0.02; 5 years ago it was 0.30)
Barclays EM Basket down -0.03 at 3.96 (began the year at 4.27; 5 years ago it was 4.98)
 
Selected Currencies
$ weakened -0.0008 versus € (-0.07%) at 1.0852 ($: YTD: 3.36%; 5YR: -1.2%)
€ weakened -0.0006 versus £ (+0.05%) at 1.1322 (€: YTD: 4.34%; 5YR: 23.7%)
$ weakened -0.0016 versus £ (-0.13%) at 1.2286 ($: YTD: 7.37%; 5YR: 18.2%)
¥ strengthened +0.2200 versus $ (+0.20%) at 107.5600 (¥: YTD: -0.95%; 5YR: 11.5%)
 
Selected Commodities
Brent Crude ($/bbl) down -2.76 (-15.94%) at 14.56 (YTD: -78.08%; 5YR: -76.0%)
WTI Crude ($/bbl) up +47.64 (+126.60%) at 10.01 (YTD: -83.61%; 5YR: -81.9%)
Gold ($/ozt) up +10.95 (+0.65%) at 1684.09 (YTD: 10.59%; 5YR: 41.7%)
Copper ($/mt) down -153.50 (-2.96%) at 5030.00 (YTD: -18.53%; 5YR: -15.4%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros