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30th January 2020

30/01/2020

Market Data and Morning Chat

Morning Chat

Moving four words: The US Federal Reserve rate setting committee, the FOMC, announced they’re holding rates steady at 1½ to 1¾%. Their statement triggered a 0.9% slippage in US equity markets while the US 10-year fell a marginal 0.05%. Why? Well, only four words changed from last month. “October” changed to “December”, household spending slipped from “strong” to “moderate” and inflation – up from 2.1% to 2.3% - is “moving to” the symmetric 2% target rather than “near” meaning the FOMC hopes inflation naturally moderates but are comfortable with higher inflation if it doesn’t, presumably to help spur an investment response.

Moderating forwards: Stocks may have slipped after the FOMC announcement, but it wasn’t actually a bad day, although US indices were a bit mixed.  European exchanges were generally up around ¼ to ½% on decent results from the banks and strong gains by some auto sector names such as Pirelli (+2.5%) and Renault (+2.0%).  The US stocks were up by even more just prior to the FOMC statement, similarly led by strong results.  Apple saw a decent 2.1% gain after their numbers last night and General Electric (+10.3%) delivered a shockingly strong rally on their better-than-expected earnings and cash flow.

Finished Forewords: As the European Parliament bid farewell to the UK contingent, affirming the UK will leave the EU at 11pm UK-time tomorrow and move from withdrawal negotiations to trade negotiations, the US Senate saw the closing of the opening statements in President Trump’s impeachment trial.  For the UK, we move from the “cliff-edge” of a no [withdrawal] deal Brexit to the cliff-edge of a no [trade] deal Brexit. This is just a lull. For Trump, the impeachment trial moves next Wednesday to two days of questioning of the two legal teams and the question of witnesses – also a lull.

Asia down & futures mixed for Europe, weak for the US on coronavirus worries after a busy day
Some posit Nancy Pelosi triggered the impeachment trial to keep Saunders and Warren tied up
… helping Biden win Iowa and New Hampshire – but new polls have Saunders level-pegged
Novartis (+1.2% total) injected good news into the shares as new drugs help lift net sales by 9%
Tesla (+14.3% total) shares electrifyingly leapt aftermarket on a big volume-driven earnings beat
ServiceNow (+7.2% total) showed a positive relationship to results on a significant earnings beat
Microsoft (+6.1% total) wasn’t blue with great earnings as Azure sales rose 62% on the quarter
Avery Dennison (+5.4% total) reported strong earnings as they stuck up decent branding growth
Corning (+5% afterhours) displays robust Q4 earnings numbers and re-affirms long-term outlook
Mcdonald’s (+1.8% total) rallied as like-for-like sales and operating income numbers sizzled
Despite their first loss in a decade as 737Max issues winged earnings, Boeing (+1.7%) climbed
PayPal (-2.8% aftermarket) saw a 22% payments volume gain but offered weaker 2020 guidance

Market Data

Selected Global Aggregates (Total returns, unhedged) 
MSCI AC World Equities (Local) up +0.02 (+0.00%) at 1,390 (YTD: 1.07%; 5YR: 60.6%)
MSCI AC World Equities (USD) up +4.37 (+0.04%) at 10,051 (YTD: 0.72%; 5YR: 60.4%)
Barclays Global Aggregate Bonds up +0.84 (+0.16%) at 515 (YTD: 0.71%; 5YR: 13.1%)
 
Selected Equity Indices (Capital returns) 
S&P 500 down -2.84 (-0.09%) at 3,273 (YTD: 1.32%; 5YR: 64.1%) 
NASDAQ up +5.48 (+0.06%) at 9,275 (YTD: 3.37%; 5YR: 100.1%) 
Euro STOXX 50 up +17.14 (+0.46%) at 3,736 (YTD: -0.23%; 5YR: 11.5%) 
FTSE 100 up +2.88 (+0.04%) at 7,484 (YTD: -0.78%; 5YR: 10.9%) 
CAC up +29.07 (+0.49%) at 5,955 (YTD: -0.39%; 5YR: 29.3%) 
DAX up +21.31 (+0.16%) at 13,345 (YTD: 0.72%; 5YR: 24.8%) 
Nikkei 225  down -401.65 (-1.72%) at 22,978 (YTD: -2.87%; 5YR: 30.0%) 
Hang Seng down -631.95 (-2.33%) at 26,529 (YTD: -5.89%; 5YR: 8.2%) 
MSCI Emerging Markets down -4.21 (-0.38%) at 1,098 (YTD: -1.54%; 5YR: 14.1%) 
 
Selected Government Bond Yields 
US 2 Year down -0.01 at 1.40 (began the year at 1.57; 5 years ago it was 0.45) 
US 10 Year down -0.01 at 1.57 (began the year at 1.92; 5 years ago it was 1.64) 
UK 10 Year down -0.04 at 0.52 (began the year at 0.82; 5 years ago it was 1.33) 
Germany 10 Year down 0.00 at -0.38 (began the year at -0.19; 5 years ago it was 0.30) 
France 10 Year up +0.00 at -0.13 (began the year at 0.12; 5 years ago it was 0.54) 
Italy 10 Year up +0.00 at 0.95 (began the year at 1.41; 5 years ago it was 1.59) 
Japan 10 Year down -0.02 at -0.06 (began the year at -0.02; 5 years ago it was 0.27) 
Barclays EM Basket down -0.01 at 4.07 (began the year at 4.27; 5 years ago it was 4.88)
 
Selected Currencies 

$ weakened -0.0006 versus € (-0.05%) at 1.1011 ($: YTD: 1.94%; 5YR: 2.5%) 
€ strengthened +0.0007 versus £ (-0.06%) at 1.1817 (€: YTD: -0.03%; 5YR: 12.6%) 
$ unchanged 0.0000 versus £ (0.00%) at 1.3012 ($: YTD: 1.89%; 5YR: 13.4%) 
¥ strengthened +0.2200 versus $ (+0.20%) at 108.9300 (¥: YTD: 0.32%; 5YR: 7.8%) 
 
Selected Commodities 
Brent Crude ($/bbl) down -0.48 (-0.82%) at 58.31 (YTD: -12.21%; 5YR: 14.9%) 
WTI Crude ($/bbl) down -0.15 (-0.28%) at 53.33 (YTD: -12.66%; 5YR: 19.8%) 
Gold ($/ozt) up +7.10 (+0.45%) at 1578.09 (YTD: 3.63%; 5YR: 23.7%) 
Copper ($/mt) down -62.00 (-1.09%) at 5641.00 (YTD: -8.63%; 5YR: 4.6%) 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros