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29th April 2020

29/04/2020

Market Data and Morning Chat

Morning Chat

Bank statements: European banks had a solid day rising a market-leading sector gain of 4.9%, nearly three times broad market gains.  The driver was an EU Commission proposal to significantly ease bank leverage limits – essentially allowing banks to hold less capital relative to their assets and correspondingly carry more loans for a given capital base.  It could allow nearly half a trillion euros in further lending to help support the economy. Coupled with accounting tweeks to charge IT spending as an investment and a better-than-expected set of numbers from Deutsche Bank, and it was enough to lift European equities overall.   

It’s only a graze: The US however saw equities slide, only marginally, as earlier gains were lost. The Conference Board’s Consumer Confidence release was the trigger, as the weight of the unemployed pushed the index marginally lower-than-hoped to 86.9 – a six-year low. Equities were also grazed by another week of a 10million barrel oil inventory build further trimming West Texas Intermediate, they were grazed by news that US Covid-19 cases passed the million mark. They were also grazed – well sentiment was - by the weaker-than-hoped earnings posted by Starbucks (-0.1%) as the company saw sales ground down by store closures.

Numbers of the Alphabet: Speaking of grazing, Mondelez (-1.6%) noted consumers were snacking more under lockdown. The trend helped earnings, but pulling guidance didn’t help the shares.  Oh, and Advanced Micro Devices (-4.8%) noted their chips were less on the menu than hoped , while Ford Motors (-0.4%) stalled as they announce they expected to post a $5billion loss. Depressed? Well, Alphabet was a different story.  Google’s parent surged 4.7% for the day (7.8% aftermarket) putting them effectively flat year-to-date as Google Cloud services were up over 50% from Q1 last year, YouTube revenues up by a third & guidance optimistic.

…and Alphabet’s strong results are helping deliver a good spell for equity futures today
… and gains in Asia despite Samsung (-0.2%) warning on profits after Covid-19 impact
The Federal Open Market Committee meets today to set the US Fed Funds rate
Australia’s inflation rate surfed up to a near 6-year high 2.2% on food price jump
… speaking of chips, well fires, Belgians are being asked to eat more to ease potato glut 
… while BP (+2.6%) management is fried by analysts for maintaining their dividend
Barclays just reported a 42% fall in net profit thanks to a £2.6billion credit impairment charge
Southwest Airlines (+3.1%) raises $4billion in equity & bond sales to counter first loss in 9 years
DR Horton (+12.0%) housebuilders put the roof on strong quarter with 20% rise in net orders
Roper Tech (+7.1%) treats us to better-than-expected earnings and free cash flow
Akamai (unchanged) recovers trading day’s lost ground on 26% rise in cloud security revenues

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +0.83 (+0.07%) at 1,201 (YTD: -12.66%; 5YR: 28.7%)
MSCI AC World Equities (USD) up +3.75 (+0.04%) at 8,629 (YTD: -13.53%; 5YR: 27.7%)
Barclays Global Aggregate Bonds up +1.19 (+0.23%) at 517 (YTD: 0.96%; 5YR: 13.9%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -15.09 (-0.52%) at 2,863 (YTD: -11.37%; 5YR: 35.9%)
NASDAQ down -122.43 (-1.40%) at 8,608 (YTD: -4.07%; 5YR: 71.3%)
Euro STOXX 50 up +49.97 (+1.73%) at 2,932 (YTD: -21.71%; 5YR: -18.9%)
FTSE 100 up +111.71 (+1.91%) at 5,959 (YTD: -21.00%; 5YR: -14.2%)
CAC up +64.53 (+1.43%) at 4,570 (YTD: -23.56%; 5YR: -9.3%)
DAX up +135.64 (+1.27%) at 10,796 (YTD: -18.52%; 5YR: -5.6%)
Nikkei 225  down -12.03 (-0.06%) at 19,771 (YTD: -16.42%; 5YR: -1.4%)
Hang Seng up +51.04 (+0.21%) at 24,627 (YTD: -12.64%; 5YR: -13.3%)
MSCI Emerging Markets up +7.37 (+0.82%) at 903 (YTD: -19.02%; 5YR: -14.8%)
 
Selected Government Bond Yields
US 2 Year down -0.01 at 0.21 (began the year at 1.57; 5 years ago it was 0.56)
US 10 Year down -0.05 at 0.61 (began the year at 1.92; 5 years ago it was 2.04)
UK 10 Year down -0.01 at 0.29 (began the year at 0.82; 5 years ago it was 1.83)
Germany 10 Year down 0.00 at -0.47 (began the year at -0.19; 5 years ago it was 0.28)
France 10 Year up +0.00 at 0.00 (began the year at 0.12; 5 years ago it was 0.57)
Italy 10 Year down 0.00 at 1.73 (began the year at 1.41; 5 years ago it was 1.50)
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 +0.03 at 3.90 (began the year at 4.27; 5 years ago it was 5.02)
 
Selected Currencies
$ weakened -0.0018 versus € (-0.17%) at 1.0850 ($: YTD: 3.38%; 5YR: 2.6%)
€ weakened -0.0023 versus £ (+0.20%) at 1.1498 (€: YTD: 2.74%; 5YR: 20.6%)
$ weakened -0.0048 versus £ (-0.39%) at 1.2476 ($: YTD: 5.93%; 5YR: 19.3%)
¥ strengthened +0.3400 versus $ (+0.32%) at 106.5400 (¥: YTD: -1.91%; 5YR: 11.4%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.15 (+0.80%) at 18.90 (YTD: -71.54%; 5YR: -70.3%)
WTI Crude ($/bbl) down -0.44 (-3.44%) at 12.34 (YTD: -79.79%; 5YR: -78.4%)
Gold ($/ozt) up +5.53 (+0.32%) at 1711.18 (YTD: 12.37%; 5YR: 41.4%)
Copper ($/mt) up +26.00 (+0.50%) at 5223.00 (YTD: -15.40%; 5YR: -14.6%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros