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31st March 2020

31/03/2020

Market Data and Morning Chat

Morning Chat

Healthy gains: Despite upbeat futures, markets opened down.  However, pessimism faded, equities rallied with gains of 1-2% this side of the Atlantic, and 3½% that. Improving news fuelled gains prompting US health care stocks (+4.7%) to jump. Italy reported the lowest number of new Covid-19 cases since March 17, 1,200 lower than the day before. Spain reported two days of declining new cases.  More, Johnson & Johnson (+8.0%) announced a possible vaccine with human trials by September 2020, and a ramp-up to a billion dose manufacturing target by early/January 2021. Meanwhile Abbott Labs announced they’ve developed a Covid-19 test with results in five minutes.
 
Oil you could ask for and so much more: Too much more. West Texas Intermediate slipped to $20, Brent crude $22, leaving oil trading at an 18-year low. The problem is the OPEC+ production cut agreement ends tomorrow and both Russia and Saudi Arabia are poised to flood markets with another 3-4million barrels of oil a day. Meanwhile, the ongoing sequestration of so much of the global population has cut demand by possibly as much as 20million barrels a day and storage facilities are effectively full.  Even Trump is shifting his views, but action is needed quickly – maybe even tariffs!
 
How scary should a bad news – good news story be? 2008’s stock market decline intensified because authorities were slow to act. This time, governments acted with intensity and speed. But, consequently, analytical data is sparse. Then you get scary estimates like the “back-of-the-envelope” data of St Louis Federal reserve economist Faria-e-Castro predicting 47million US unemployed heavily caveated that it doesn’t actually account for the government stimulus and, moreover, the spike would be rapidly reversed as the lockdown eases. Better is focusing on Denmark’s expectation of easing shut-down conditions as early as the end of Easter as their new cases slow.
 
Futures are mixed this morning – up ½% in Europe, flat in the US with Asia trading higher
… understandable give the further gain in the US last night after Europe closed
Global Covid-19 new cases appear to holld at a steady level for five days rather than surging
UK March consumer confidence down less than feared to January's level & better than Q4
European Industrial, Services & Economic March sentiment indices all down less than forecast
China’s March manufacturing PMI recovers back to 52.0 from 25.7 and 50 in January
… while the Services PMI climbs back to normal levels at 52.3 from 29.5 in February
Japanese housing starts also down less than expected falling 12.3% in February
L’Oreal (+2.6%) proves they’re worth it, rallying on estimate of a light 5% decline in Q1 sales

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +23.23 (+2.14%) at 1,108 (YTD: -19.42%; 5YR: 21.5%)
MSCI AC World Equities (USD) up +194.50 (+2.50%) at 7,965 (YTD: -20.18%; 5YR: 21.8%)
Barclays Global Aggregate Bonds up +1.06 (+0.21%) at 511 (YTD: -0.04%; 5YR: 14.2%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +85.18 (+3.35%) at 2,627 (YTD: -18.70%; 5YR: 27.0%)
NASDAQ up +271.77 (+3.62%) at 7,774 (YTD: -13.36%; 5YR: 58.6%)
Euro STOXX 50 up +36.97 (+1.35%) at 2,766 (YTD: -26.15%; 5YR: -25.2%)
FTSE 100 up +53.41 (+0.97%) at 5,564 (YTD: -26.23%; 5YR: -17.9%)
CAC up +27.02 (+0.62%) at 4,379 (YTD: -26.76%; 5YR: -13.0%)
DAX up +183.45 (+1.90%) at 9,816 (YTD: -25.91%; 5YR: -18.0%)
Nikkei 225  down -46.87 (-0.25%) at 19,038 (YTD: -19.52%; 5YR: -0.9%)
Hang Seng up +199.43 (+0.86%) at 23,375 (YTD: -17.08%; 5YR: -6.1%)
MSCI Emerging Markets down -10.52 (-1.25%) at 832 (YTD: -25.36%; 5YR: -14.6%)
 
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 -0.04 at 0.68 (began the year at 1.92; 5 years ago it was 1.92)
UK 10 Year down -0.03 at 0.34 (began the year at 0.82; 5 years ago it was 1.58)
Germany 10 Year down 0.00 at -0.50 (began the year at -0.19; 5 years ago it was 0.18)
France 10 Year down 0.00 at -0.05 (began the year at 0.12; 5 years ago it was 0.47)
Italy 10 Year up +0.00 at 1.48 (began the year at 1.41; 5 years ago it was 1.24)
Japan 10 Year up +0.02 at 0.02 (began the year at -0.02; 5 years ago it was 0.40)
Barclays EM Basket up +0.02 at 4.46 (began the year at 4.27; 5 years ago it was 4.99)
 
Selected Currencies
$ strengthened +0.0009 versus € (+0.08%) at 1.1011 ($: YTD: 1.94%; 5YR: -2.6%)
€ strengthened +0.0045 versus £ (-0.40%) at 1.1196 (€: YTD: 5.51%; 5YR: 23.6%)
$ strengthened +0.0058 versus £ (+0.47%) at 1.2329 ($: YTD: 7.04%; 5YR: 16.9%)
¥ weakened -0.4200 versus $ (-0.39%) at 108.3300 (¥: YTD: -0.23%; 5YR: 10.7%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.66 (+2.99%) at 22.70 (YTD: -65.82%; 5YR: -57.4%)
WTI Crude ($/bbl) down -1.42 (-6.60%) at 20.09 (YTD: -67.10%; 5YR: -58.7%)
Gold ($/ozt) down -6.65 (-0.41%) at 1614.25 (YTD: 6.00%; 5YR: 36.4%)
Copper ($/mt) down -21.00 (-0.44%) at 4769.50 (YTD: -22.75%; 5YR: -21.6%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros