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27th March 2020

19/03/2020

Market Data and Morning Chat

Morning Chat

Somewhat through the looking glass: The US Department of Labor released weekly jobless claims data yesterday. Analysts had forecast 1.7million for the week ending 20 March, substantially more than the 282,000 a week earlier. However, forecasts significantly underestimated the actual 3,283,000 claims, fully three million more than anticipated. Yet equity markets continued rallying, with the US technically entering a bull market with equities up over 20% from their low (albeit on an intraday basis) Moreover, the Dow recorded its biggest three-day gain since 1931, all of which implies the market expected weaker numbers than the analysts.  It’s worth reflecting on.
 
It takes all the running you can do, to keep in the same place: So too the US dollar. Since February, the US dollar has swerved from lows to highs and back. Versus sterling, it rapidly strengthened from the $1.30 held for most of 2020 to $1.15 and now equally quickly slipped back to $1.22, Against the Euro it’s even more erratic, jumping from $1.11 to $1.08 in February, weakening to $1.14, strengthening to $1.07 and now back to $1.10. Massive moves each time you blink, but much less if you closed your eyes for longer as rates are mostly unchanged.
 
“The horror, I shall never, never forget!”... “You will, though," the Queen said: The speed and strength of investment and life’s changes we’ve seen the last weeks reflects the lack of solid information. But with two more weeks of Covid-19 data, distressing data, but with such small positives as Italy’s stabilised new cases rate and the UK seeing notably fewer cases than Italy after a similar length of time from the hundredth case implying, maybe, sequestering is working. Meanwhile, Governments and Central Banks have blanketed markets with trillions of pounds in stimulus and the populace with support, hopefully softening the hardships.
 

After such a strong day again, it’s no wonder equity futures are slipping slightly today 
 ... while Asian markets were able to  close higher
 Investment grade bond yield spreads improved this week by a record level 
 ... after last week saw the worst deterioration since 2009 
 Heavily-hit services sector names – especially hotels, airlines & retail – recovered yesterday
 … with Meggitt (+13.5%), Compass (+11.0%) & Carnival (+10.3%) – strongly rebounding

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +42.52 (+3.97%) at 1,114 (YTD: -18.99%; 5YR: 22.6%)
MSCI AC World Equities (USD) up +381.96 (+5.03%) at 7,976 (YTD: -20.07%; 5YR:21.7%)
Barclays Global Aggregate Bonds up +7.50 (+1.50%) at 507 (YTD: -0.96%; 5YR: 12.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +154.51 (+6.24%) at 2,630 (YTD: -18.59%; 5YR: 27.6%)
NASDAQ up +413.24 (+5.60%) at 7,798 (YTD: -13.10%; 5YR: 59.4%)
Euro STOXX 50 up +47.64 (+1.70%) at 2,848 (YTD: -23.96%; 5YR: -22.6%)
FTSE 100 up +127.53 (+2.24%) at 5,816 (YTD: -22.89%; 5YR: -15.2%)
CAC 40 up +111.28 (+2.51%) at 4,544 (YTD: -24.00%; 5YR: -9.7%)
DAX up +126.70 (+1.28%) at 10,001 (YTD: -24.52%; 5YR: -15.7%)
Nikkei 225  up +724.83 (+3.88%) at 19,389 (YTD: -18.04%; 5YR: 0.5%)
Hang Seng up +197.58 (+0.85%) at 23,550 (YTD: -16.46%; 5YR: -3.8%)
MSCI Emerging Markets up +14.74 (+1.76%) at 851 (YTD: -23.63%; 5YR: -11.2%)
 
Selected Government Bond Yields
US 10 Year down -0.04 at 0.80 (began the year at 1.92; 5 years ago it was 1.96)
US 2 Year down -0.01 at 0.28 (began the year at 1.57; 5 years ago it was 0.59)
UK 10 Year down -0.05 at 0.40 (began the year at 0.82; 5 years ago it was 1.54)
Germany 10 Year down 0.00 at -0.37 (began the year at -0.19; 5 years ago it was 0.21)
France 10 Year down 0.00 at 0.01 (began the year at 0.12; 5 years ago it was 0.50)
Italy 10 Year up +0.00 at 1.22 (began the year at 1.41; 5 years ago it was 1.35)
Japan 10 Year up +0.03 at 0.01 (began the year at -0.02; 5 years ago it was 0.37)
Barclays EM Basket down -0.12 at 4.55 (began the year at 4.27; 5 years ago it was 4.97)
 
Selected Currencies
$ weakened -0.0018 versus € (-0.16%) at 1.1042 ($: YTD: 1.67%; 5YR: -1.3%)
€ weakened -0.0056 versus £ (+0.51%) at 1.1074 (€: YTD: 6.67%; 5YR: 23.2%)
$ weakened -0.0079 versus £ (-0.65%) at 1.2225 ($: YTD: 7.83%; 5YR: 17.8%)
¥ strengthened +0.8600 versus $ (+0.79%) at 108.6400 (¥: YTD: 0.06%; 5YR: 9.7%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.45 (-1.72%) at 25.76 (YTD: -61.22%; 5YR: -52.6%)
WTI Crude ($/bbl) up +3.61 (+19.01%) at 22.60 (YTD: -62.99%; 5YR: -56.1%)
Gold ($/ozt) down -14.46 (-0.88%) at 1623.57 (YTD: 6.62%; 5YR: 35.2%)
Copper ($/mt) down -51.00 (-1.05%) at 4804.00 (YTD: -22.19%; 5YR: -22.2%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros