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3th September 2020

03/09/2020

Market Data and Morning Chat

Morning Chat

Almost unreal: So, German retail sales were weaker-than-hoped, up only 4.2% not the 5.1% expected. Australian GDP was … disappointing. US factory orders ex-transports – the less erratic number – fell short of the +4.5% forecast at +2.1%. Canadian productivity was amazing, but (can’t believe I’m saying this) it’s only Canada.  Ah, the ADP sneak-peak at US employment? 950,000 forecast, 212,000 last time. This time? 428,000. Improving numbers but not improving as expected (well, Canada).  However, equity markets didn’t blink.  Apple may have fallen 2.1% but global utilities were +2.7% in GBP-terms & communications +2.4% as left-behind sectors took up the running.
 
 Crash! Boom! Bang!: No, not equities – the main indices were mostly green all ‘round.  Oil however? Not so lucky. The energy sector was the only sector in the red globally yesterday (in sterling-terms), down… ok, down only 0.1% but every other sector was up 1% or more. Why? The Energy Information Administration report confirmed another strong 9.36million barrel reduction in inventories versus a 1.89million drop expected. That wasn’t a problem.  However, a big drop in refinery capacity data (utilisation at 76.7%) signalled maintenance season is here. Problem. Oil prices erased a month’s gain ($1.4), and energy stocks stalled in response.  

Who’s got the Look?: So there’s less than 60 days until Americans elect their new President (or at least vote, the election can take a little time to confirm).  Democrat nominee Joe Biden’s been looking ok - the election is seen as his to lose.  Since the conventions closed though, Donald Trump has been tweeting, speaking and moving while Joe’s had a little down-time. Result – Trump’s picked up 2-3% in the polls and Democrats are getting tense. Swing state races have tightened and Trump’s approval is up – though he’s still only seen with a 30% chance of winning the Presidential race.
 
 Today’s futures show Europe up ½% on yesterday’s American optimism, but the US down ¼%
 …but in-line Chinese & Japanese service PMIs generate mixed results – Japan up, China down
 … meanwhile today’s a big day – European & US services PMIs and US initial jobless claims
 US Centre for Disease Control tell US states to prepare for a November 1 vaccine
 Macron launches €100billion “France Relaunch” stimulus as debt nears 120% of GDP
 …while Merkel’s coalition back plans for deficit spending next year to bolster the recovery
 With quicker-than-expected house building rebound in the UK as prices rise at 16-year high …
 … Barrett’s (+8.7%), Taylor Wimpey (+7.1%) & Persimmon (5.6%) lay foundation for UK gains
 Macy’s (-1.1%) shopped despite less-than-feared loss as sales fall 35% (on-line up 53%!)

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Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +16.69 (+1.16%) at 1,462 (YTD: 6.28%; 5YR: 71.3%)
MSCI AC World Equities (USD) up +116.18 (+1.10%) at 10,718 (YTD: 7.41%; 5YR: 73.8%)
Barclays Global Aggregate Bonds down -0.67 (-0.12%) at 543 (YTD: 6.16%; 5YR: 22.4%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +54.19 (+1.54%) at 3,581 (YTD: 10.84%; 5YR: 83.5%)
NASDAQ up +116.77 (+0.98%) at 12,056 (YTD: 34.37%; 5YR: 154.7%)
Dow Jones Industrial up +454.84 (+1.59%) at 29,101 (YTD: 1.97%; 5YR: 77.7%)
Euro STOXX 50 up +60.19 (+1.84%) at 3,338 (YTD: -10.88%; 5YR: 2.1%)
FTSE 100 up +78.90 (+1.35%) at 5,941 (YTD: -21.23%; 5YR: -4.1%)
CAC up +93.64 (+1.90%) at 5,032 (YTD: -15.83%; 5YR: 8.1%)
DAX up +269.18 (+2.07%) at 13,243 (YTD: -0.04%; 5YR: 28.4%)
Nikkei 225  up +218.38 (+0.94%) at 23,466 (YTD: -0.81%; 5YR: 29.1%)
Hang Seng down -150.17 (-0.60%) at 24,970 (YTD: -11.42%; 5YR: 19.3%)
MSCI Emerging Markets down -1.12 (-0.10%) at 1,119 (YTD: 0.38%; 5YR: 39.6%)
 
Selected Government Bond Yields
US 2 Year up +0.00 at 0.14 (began the year at 1.57; 5 years ago it was 0.69)
US 10 Year up +0.01 at 0.66 (began the year at 1.92; 5 years ago it was 2.16)
UK 10 Year down -0.07 at 0.23 (began the year at 0.82; 5 years ago it was 1.90)
Germany 10 Year down 0.00 at -0.48 (began the year at -0.19; 5 years ago it was 0.72)
France 10 Year down 0.00 at -0.18 (began the year at 0.12; 5 years ago it was 1.06)
Italy 10 Year down -0.01 at 0.96 (began the year at 1.41; 5 years ago it was 1.91)
Japan 10 Year down 0.00 at 0.03 (began the year at -0.02; 5 years ago it was 0.40)
Barclays EM Basket up +0.01 at 3.74 (began the year at 4.27; 5 years ago it was 5.45)
 
Selected Currencies
$ strengthened +0.0048 versus € (+0.41%) at 1.1800 ($: YTD: -5.09%; 5YR: -6.1%)
€ weakened -0.0014 versus £ (+0.12%) at 1.1263 (€: YTD: 4.88%; 5YR: 21.8%)
$ strengthened +0.0037 versus £ (+0.28%) at 1.3291 ($: YTD: -0.21%; 5YR: 12.9%)
¥ weakened -0.1100 versus $ (-0.10%) at 106.2800 (¥: YTD: -2.16%; 5YR: 12.9%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.13 (-0.30%) at 43.07 (YTD: -35.16%; 5YR: -13.8%)
WTI Crude ($/bbl) down -1.25 (-2.92%) at 41.51 (YTD: -32.02%; 5YR: -10.3%)
Gold ($/ozt) down -5.39 (-0.28%) at 1930.88 (YTD: 26.80%; 5YR: 71.8%)
Copper ($/mt) up +9.50 (+0.14%) at 6697.00 (YTD: 8.47%; 5YR: 30.8%)
 
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five-year return

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros