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28th April 2020

28/04/2020

Market Data and Morning Chat

Morning Chat

Buddy, spare a dime? The EU may be stalling on stimulus, but the Bank of Japan made a telling move, increasing its capacity to buy short-dated bonds.  Thus equity futures – and in turn the markets themselves – got off to a good start yesterday.  The green screens held as we moved through the day. Key to the continuing later vigour was the strong gains by US regional banks. They rallied thanks their outsized share of business from the topping-up of the Paycheck Protection Program, a coronavirus safety net offering short-term loans to small businesses for wages, derived from the CARES Act. 

Glut not gluttony: Although sharing a common Latin root (gluttire), a glut doesn’t necessarily trigger gluttony - if you can swallow that - as oil supply & demand can attest. There’s still a fear of owning too much of the leading or most imminent June contract because when it closes you have to take delivery of the oil.  Given 15,700 barrels fills an Olympic-sized swimming pool, the glut’s filling nearly 1000 swimming pools a day. That’s a lot of pools, so the United States Oil ETF (down 83.3% year-to-date) is eager to shift to later-dated contracts (much like the Olympics), but selling June for July – even this early – is knocking the June price.

Not everything’s a shoe-in for gains: The media seems transfixed in the Covid-19 headlines – so much so that other stories see little light. Like earnings season. Okay, Adidas (+0.7%) was probably happy to tread lightly. While US sales increased and Europe was better-than-hoped, Chinese sales failed to hit their stride, instead heading on the wrong track with sales declining 45%. Bayer (+5.8%), though, announced consumer-care numbers that were just the medicine to return to growth plus they cultivated a healthy yield in their crop-sciences division too. Finally, Keurig Dr. Pepper (+5.0%) also showed fizz thanks to a sales boost from Covid-19 stockpiling.

Equity futures are dow.. no up.. no, wait, down.. no up.. let’s call it flat this morning
… but oil continues to trade down on the June contract, slightly up on later dates
… while gold lies mid-point in its three-week $1650 to $1750 trading range
HSBC (+3.5%) earnings miss due to the bank’s biggest loan provisions in 9 years
Novartis (+2.4%) today treated investors to Q1 sales up 11% while maintaining guidance
Capgemini (+1.0%) revenues up 3.1% year-on-year, but cuts dividend 29% & ditches guidance
ABB (+3.3%) sees sales & orders down on coronavirus effects though beats estimates 
US Beef prices at 20% more than highest in 29-year pricing history on food supply concerns
… but lean hogs price isn’t bringing home the bacon as it remains near 18-year lows 

  

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +19.64 (+1.66%) at 1,200 (YTD: -12.72%; 5YR: 27.6%)
MSCI AC World Equities (USD) up +150.81 (+1.78%) at 8,625 (YTD: -13.57%; 5YR: 27.1%)
Barclays Global Aggregate Bonds up +0.25 (+0.05%) at 515 (YTD: 0.73%; 5YR: 13.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +41.74 (+1.47%) at 2,878 (YTD: -10.90%; 5YR: 36.1%)
NASDAQ up +95.64 (+1.11%) at 8,730 (YTD: -2.70%; 5YR: 72.7%)
Euro STOXX 50 up +73.02 (+2.60%) at 2,882 (YTD: -23.04%; 5YR: -22.4%)
FTSE 100 up +94.56 (+1.64%) at 5,847 (YTD: -22.48%; 5YR: -16.8%)
CAC up +111.94 (+2.55%) at 4,505 (YTD: -24.64%; 5YR: -12.9%)
DAX up +323.90 (+3.13%) at 10,660 (YTD: -19.54%; 5YR: -9.8%)
Nikkei 225  down -38.74 (-0.20%) at 19,744 (YTD: -16.54%; 5YR: -1.6%)
Hang Seng up +149.30 (+0.61%) at 24,429 (YTD: -13.34%; 5YR: -14.1%)
MSCI Emerging Markets up +15.92 (+1.81%) at 895 (YTD: -19.68%; 5YR: -16.1%)
 
Selected Government Bond Yields
US 2 Year down -0.01 at 0.22 (began the year at 1.57; 5 years ago it was 0.56)
US 10 Year down 0.00 at 0.66 (began the year at 1.92; 5 years ago it was 2.00)
UK 10 Year up +0.01 at 0.30 (began the year at 0.82; 5 years ago it was 1.70)
Germany 10 Year up +0.00 at -0.46 (began the year at -0.19; 5 years ago it was 0.16)
France 10 Year up +0.00 at 0.01 (began the year at 0.12; 5 years ago it was 0.42)
Italy 10 Year down 0.00 at 1.76 (began the year at 1.41; 5 years ago it was 1.38)
Japan 10 Year down -0.01 at -0.05 (began the year at -0.02; 5 years ago it was 0.30)
Barclays EM Basket up +0.02 at 3.88 (began the year at 4.27; 5 years ago it was 5.02)
 
Selected Currencies
$ weakened -0.0005 versus € (-0.05%) at 1.0826 ($: YTD: 3.59%; 5YR: 1.3%)
€ weakened -0.0011 versus £ (+0.10%) at 1.1472 (€: YTD: 2.97%; 5YR: 21.7%)
$ weakened -0.0018 versus £ (-0.15%) at 1.2420 ($: YTD: 6.36%; 5YR: 18.9%)
¥ strengthened +0.0700 versus $ (+0.07%) at 107.2300 (¥: YTD: -1.26%; 5YR: 10.9%)
 
Selected Commodities

Brent Crude ($/bbl) down -0.40 (-2.19%) at 17.86 (YTD: -73.11%; 5YR: -71.5%)
WTI Crude ($/bbl) down -3.26 (-20.32%) at 12.78 (YTD: -79.07%; 5YR: -77.6%)
Gold ($/ozt) down -18.07 (-1.06%) at 1694.37 (YTD: 11.26%; 5YR: 39.7%)
Copper ($/mt) up +57.50 (+1.12%) at 5197.00 (YTD: -15.82%; 5YR: -14.3%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros