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3rd February 2020

03/02/2020

Market Data and Morning Chat

Morning Chat

China catches a cold and equities get sold: Last week market sentiment was dominated by Wuhan’s novel coronavirus. No wonder; while the statistical data is still limited, the virus is spreading more rapidly than SARS – in part because China’s transport network is much more extensive than in 2003 – but, a small mercy, at least the virus appears substantially less lethal. Nonetheless, equity markets tumbled 1½ to 2½% on Friday to close out the week broadly 2 to 4% down. Those declines are reasonably mild compared to past epidemics. Moreover, longer-term market losses are mostly short-lived regardless of the human tragedy.

Unemployment rate and the rest of the slate: The virus effect will likely be felt for some time yet.  SARS lingered for 100 days, and we’re only on about day 25 so far.  However, global equities have still moved on economic and market factors too with more this week.  Further corporate earnings will be announced, triggering noticeable stock-specific effects.  It’s the first week of the month, so US non-farm payrolls data including unemployment numbers come on Friday (forecast 150,000 & 3.5%) . Additionally, there are Markit surveys and European producer prices. Quite a lot to move the market dials.

Iowa caucus votes and impeachment endnotes: Today also sees the good Democrat citizens of the fine state of Iowa play musical chairs. At least that’s how a caucus is often described.  Party members meet in halls across the state to stand with those who support the same candidate.  If a 15% threshold isn’t reached, they swirl again until the results are known.  Who’ll win? Polls currently predict Bernie Saunders will fare the best with Joe Biden second then Warren.  Meanwhile, with the Senate voting 51-49 against calling witnesses, the Donald Trump’s impeachment trial will likely close with a dismissive vote.

A not so happy New Year – After closure, China’s CSI300 index is playing catch-up down 7.9%
…Meanwhile equity futures are staging a rebound today, generally rising ¼ to ¾%
Global warming? Gobbler’s Knob resident groundhog Punxsutawney Phil predicts early spring
Ho, Ho, Oh! German retail sales slipped 3.3% in December versus the 0.5% fall forecast
France & Italy post negative GDP numbers for Q4, down 0.1% and 0.3% respectively
Colgate-Palmolive (+6.2%) gained the most in 11 years as their sales cleaned up
Ryanair (+0.4% Friday) reported flying high, up 21% with passenger numbers up 6%
Honeywell (-2.9%) down on their 2020 forecast on an expectation of industrial slowdown

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -17.88 (-1.29%) at 1,367 (YTD: -0.60%; 5YR: 55.0%)
MSCI AC World Equities (USD) down -124.71 (-1.24%) at 9,921 (YTD: -0.58%; 5YR: 54.8%)
Barclays Global Aggregate Bonds up +1.50 (+0.29%) at 518 (YTD: 1.28%; 5YR: 13.5%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -58.14 (-1.77%) at 3,226 (YTD: -0.16%; 5YR: 57.3%)    
NASDAQ down -148.00 (-1.59%) at 9,151 (YTD: 1.99%; 5YR: 93.6%)    
Euro STOXX 50 down -49.87 (-1.35%) at 3,641 (YTD: -2.78%; 5YR: 6.6%)    
FTSE 100 down -95.95 (-1.30%) at 7,286 (YTD: -3.40%; 5YR: 6.0%)    
CAC down -65.43 (-1.11%) at 5,806 (YTD: -2.87%; 5YR: 24.1%)    
DAX down -175.15 (-1.33%) at 12,982 (YTD: -2.02%; 5YR: 19.2%)    
Nikkei 225  down -233.24 (-1.01%) at 22,972 (YTD: -2.89%; 5YR: 32.5%)    
Hang Seng up +61.25 (+0.23%) at 26,374 (YTD: -6.44%; 5YR: 7.4%)    
MSCI Emerging Markets down -10.45 (-0.97%) at 1,062 (YTD: -4.69%; 5YR: 8.8%)    
    
Selected Government Bond Yields    
US 2 Year up +0.04 at 1.35 (began the year at 1.57; 5 years ago it was 0.51)    
US 10 Year up +0.03 at 1.54 (began the year at 1.92; 5 years ago it was 1.79)    
UK 10 Year down -0.02 at 0.52 (began the year at 0.82; 5 years ago it was 1.46)    
Germany 10 Year up +0.01 at -0.43 (began the year at -0.19; 5 years ago it was 0.34)    
France 10 Year up +0.01 at -0.17 (began the year at 0.12; 5 years ago it was 0.58)    
Italy 10 Year up +0.01 at 0.95 (began the year at 1.41; 5 years ago it was 1.58)    
Japan 10 Year up +0.01 at -0.06 (began the year at -0.02; 5 years ago it was 0.36)    
Barclays EM Basket down -0.02 at 4.02 (began the year at 4.27; 5 years ago it was 4.95)
    
Selected Currencies    
$ strengthened +0.0008 versus € (+0.07%) at 1.1075 ($: YTD: 1.37%; 5YR: 3.5%)    
€ strengthened +0.0036 versus £ (-0.30%) at 1.1871 (€: YTD: -0.49%; 5YR: 11.3%)    
$ strengthened +0.0049 versus £ (+0.37%) at 1.3147 ($: YTD: 0.87%; 5YR: 13.3%)    
¥ weakened -0.2200 versus $ (-0.20%) at 108.6400 (¥: YTD: 0.06%; 5YR: 8.0%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.39 (-0.69%) at 55.94 (YTD: -15.78%; 5YR: 0.6%)    
WTI Crude ($/bbl) down -0.58 (-1.11%) at 51.56 (YTD: -15.56%; 5YR: 6.9%)    
Gold ($/ozt) down -7.32 (-0.46%) at 1576.30 (YTD: 3.51%; 5YR: 25.2%)    
Copper ($/mt) down -20.50 (-0.37%) at 5567.00 (YTD: -9.83%; 5YR: 1.3%)    

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros