!css

4th March 2020

04/03/2020

Market Data and Morning Chat

Morning Chat 

A hard cold to shake: It was shaping up as a good day.  Anticipation of a rate cut at the next Federal Open Market Committee meeting alongside concerted global action to add economic stimulus was lifting markets.  Chinese equities closed up, so too the Europeans – even Italy (just) – but as the Greenwich Mean Time trading day was coming to a close, Fed Chairman Jerome Powell announced an emergency ½% rate cut to 1-1½% in response to the spreading Covid-19 infection. Problem is emergency, non-meeting rate cuts are unsettling, so US equities gave ground and the 10-year treasury yield fell below 1%.

Trade you a bit of a distraction: Ahead of formal trade discussions between the UK and US, both sides laid out their shopping lists. The US hopes for wider access for remanufactured or refurbed goods, textiles & apparel and – a key aspect – food & agricultural products. They would also like improved access for pharmaceuticals, biotechs and digital & telecommunication products (digital & telecomms a UK desire). Assuming UK standards are maintained, much of those demands may be met – especially if the UK gets more agri-food sales and financial sales opportunities too – all of which should lift UK GDP by 0.15% 

King in the South: The game for the Democratic throne saw a dramatic shift after the Super Tuesday results. Only days ago, Joe Biden was looking like he could be on the verge of a knockout defeat after a poor Nevada showing. Now he’s back in fray and looking to win in ten battles across the south and Warren’s Massachusetts stronghold.  Moreover, Michael Bloomberg, his closest ideological rival, who had hoped to springboard from yesterday’s primaries has been killed and is assumedly considering standing down. Indeed, only Sanders’ California victory has kept Biden from a strong claim to the crown.

Joe Biden’s strong Super Tuesday showing also helped flip market futures back to positive
… meanwhile rate cuts have also been seen in Australia and Hong Kong and expected in Canada
… and the gold price shot back up by nearly $50 on the Fed rate cut though slipping a bit today
… (by the way, just to put it in context, a sub-1% US 10-year is a never-before-seen low)
… while the now-prevailing 0.39% UK 10-year yield is also an new all-time low for the UK
… and the best yield Germany offers across the gamut of their Bunds is -0.18% for 30 years!
Another day, another budget leak – a possible 3% tax on property purchases by non-residents

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -17.67 (-1.36%) at 1,282 (YTD: -6.79%; 5YR: 40.6%)
MSCI AC World Equities (USD) down -137.64 (-1.47%) at 9,252 (YTD: -7.29%; 5YR: 40.3%)
Barclays Global Aggregate Bonds up +2.16 (+0.41%) at 526 (YTD: 2.83%; 5YR: 17.4%)
    
Selected Equity Indices (Capital returns)    

S&P 500 down -86.86 (-2.81%) at 3,003 (YTD: -7.04%; 5YR: 43.1%)    
NASDAQ down -268.08 (-2.99%) at 8,684 (YTD: -3.22%; 5YR: 74.8%)    
Euro STOXX 50 up +33.14 (+0.99%) at 3,372 (YTD: -9.96%; 5YR: -5.9%)    
FTSE 100 up +63.31 (+0.95%) at 6,718 (YTD: -10.93%; 5YR: -2.9%)    
CAC up +59.65 (+1.12%) at 5,393 (YTD: -9.78%; 5YR: 9.7%)    
DAX up +127.52 (+1.08%) at 11,985 (YTD: -9.54%; 5YR: 5.2%)    
Nikkei 225  up +17.33 (+0.08%) at 21,100 (YTD: -10.81%; 5YR: 12.8%)    
Hang Seng down -1.29 (0.00%) at 26,284 (YTD: -6.76%; 5YR: 7.4%)    
MSCI Emerging Markets up +10.79 (+1.06%) at 1,028 (YTD: -7.79%; 5YR: 5.3%)    
    
Selected Government Bond Yields    
US 2 Year down -0.03 at 0.67 (began the year at 1.57; 5 years ago it was 0.65)    
US 10 Year down -0.03 at 0.97 (began the year at 1.92; 5 years ago it was 2.12)    
UK 10 Year down -0.02 at 0.39 (began the year at 0.82; 5 years ago it was 1.88)    
Germany 10 Year down -0.01 at -0.64 (began the year at -0.19; 5 years ago it was 0.38)
France 10 Year down 0.00 at -0.33 (began the year at 0.12; 5 years ago it was 0.68)    
Italy 10 Year up +0.02 at 1.00 (began the year at 1.41; 5 years ago it was 1.39)    
Japan 10 Year down -0.02 at -0.13 (began the year at -0.02; 5 years ago it was 0.40)    
Barclays EM Basket down -0.03 at 3.91 (began the year at 4.27; 5 years ago it was 5.12)
    
Selected Currencies    
$ strengthened +0.0004 versus € (+0.04%) at 1.1155 ($: YTD: 0.66%; 5YR: -0.7%)    
€ strengthened +0.0002 versus £ (-0.02%) at 1.1478 (€: YTD: 2.92%; 5YR: 20.1%)    
$ strengthened +0.0009 versus £ (+0.07%) at 1.2802 ($: YTD: 3.48%; 5YR: 16.1%)    
¥ weakened -0.2400 versus $ (-0.22%) at 107.5800 (¥: YTD: -0.93%; 5YR: 11.3%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.60 (+1.16%) at 52.26 (YTD: -21.32%; 5YR: -13.1%)    
WTI Crude ($/bbl) up +0.43 (+0.92%) at 47.18 (YTD: -22.73%; 5YR: -6.6%)    
Gold ($/ozt) down -9.12 (-0.55%) at 1636.15 (YTD: 7.44%; 5YR: 36.2%)    
Copper ($/mt) down -33.50 (-0.59%) at 5666.50 (YTD: -8.22%; 5YR: -2.7%)    
    
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