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5th February 2020

05/02/2020

Market Data and Morning Chat

Morning Chat 

Good day, sunshine: From me to you, there was no beetling-about for global equities yesterday as the major markets posted healthy gains after the coronavirus-driven declines of the last few days.  It started with a good night and solid rebound in China – the CSI300 index recouped over 2½% by the close – and continued with robust 1¾% or so gains in Europe. The US chipped in with 1½% gains for the Dow and S&P500 and even more for the Nasdaq100. Oh, and here comes the sunniest news, the Nasdaq100 closed at a new all-time high driven by Tesla’s phenomenal 13.7% shout.

The long and winding road: The day after the Super Bowl, the Iowa primary was supposed to cleanly kick-off the Democrat’s real campaigning period s, but a failure – glitch rather than sinister hack – was a serious fumble on the opening play. Trump relished their problem tweeting “the Democrat Caucus is an unmitigated disaster. Nothing works, just like they ran the Country”. Finally, the surprising results trickled in last night with Buttigieg (26.8%), Sanders (25.2%) and Warren (18.4%) leading Biden (15.4%) with 71.4% declared. Meanwhile, Trump used the State of the Union speech to contrast his policies from the Democrat proposals and annoy Nancy Pelosi.

Can you take me back? Saturday, Ireland faces a national election.  You might think Fine Gael leader, Leo Varadkar, would be a shoe-in given his prominent Brexit role but he’s foundering domestically and unlikely to return as Taoiseach.  His minority government is in a confidence and supply agreement with the Micheál Martin-led Fianna Fáil and his polling numbers plummeted after Christmas to the very low 20%’s. Meanwhile, Fianna Fáil has held to mid-20%’s. Now, however, Mary Lou McDonald’s left-wing, “soft-Eurosceptic” Sinn Féin have hit the high 20%’s and polling lead yet remain isolated. Welcome to the helter-skelter of Irish politics.

Futures show equities giving back some of the gains in very modest declines over virus
… as another cruise ship is quarantined – this with 3,500 aboard – and the toll hits 500
Trump didn’t mentioned impeachment in his State of the Union, but focussed on the economy
… while Nancy Pelosi turned shredder ripping his speech – likely also upset by Biden’s flop
Despite copper and gold slowdown, Glencore (+5.2%) isn’t blue thanks to cobalt pick-up 
Disney’s (+2.0%) magic continues with earnings beat and solid Disney+ subscriber numbers  
Ford (-9.6%) travelling in the other direction to Tesla with weaker 2020 earnings forecast
Ferrari (-2.3%) was also not accelerating as quickly as analysts expected with slower guidance
Chipotle (+1.5%) saw spicier sales gains than expected but also noted expensed rising
Ebay (+8.9%) jumped on talks of a takeover, but ICE may only be watching not yet bidding

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +20.50 (+1.49%) at 1,393 (YTD: 1.32%; 5YR: 57.0%)
MSCI AC World Equities (USD) up +134.93 (+1.35%) at 10,094 (YTD: 1.16%; 5YR: 56.4%)
Barclays Global Aggregate Bonds down -1.69 (-0.33%) at 515 (YTD: 0.74%; 5YR: 13.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +48.67 (+1.50%) at 3,298 (YTD: 2.07%; 5YR: 59.9%)    
NASDAQ up +194.57 (+2.10%) at 9,468 (YTD: 5.52%; 5YR: 98.7%)    
Euro STOXX 50 up +71.01 (+1.94%) at 3,732 (YTD: -0.34%; 5YR: 9.5%)    
FTSE 100 up +113.51 (+1.55%) at 7,440 (YTD: -1.36%; 5YR: 8.4%)    
CAC up +102.54 (+1.76%) at 5,935 (YTD: -0.72%; 5YR: 26.2%)    
DAX up +236.55 (+1.81%) at 13,282 (YTD: 0.25%; 5YR: 21.8%)    
Nikkei 225  up +234.97 (+1.02%) at 23,320 (YTD: -1.42%; 5YR: 33.2%)    
Hang Seng up +88.69 (+0.33%) at 26,765 (YTD: -5.06%; 5YR: 8.1%)    
MSCI Emerging Markets up +25.07 (+2.36%) at 1,085 (YTD: -2.63%; 5YR: 10.5%)    
    
Selected Government Bond Yields    
US 2 Year down -0.02 at 1.39 (began the year at 1.57; 5 years ago it was 0.52)    
US 10 Year down -0.02 at 1.58 (began the year at 1.92; 5 years ago it was 1.82)    
UK 10 Year up +0.05 at 0.57 (began the year at 0.82; 5 years ago it was 1.55)    
Germany 10 Year down -0.01 at -0.41 (began the year at -0.19; 5 years ago it was 0.37)
France 10 Year down -0.04 at -0.18 (began the year at 0.12; 5 years ago it was 0.59)    
Italy 10 Year down -0.02 at 0.93 (began the year at 1.41; 5 years ago it was 1.54)    
Japan 10 Year down -0.02 at -0.07 (began the year at -0.02; 5 years ago it was 0.35)    
Barclays EM Basket up +0.01 at 4.02 (began the year at 4.27; 5 years ago it was 4.98)
    
Selected Currencies    
$ weakened -0.0001 versus € (-0.01%) at 1.1038 ($: YTD: 1.70%; 5YR: 3.6%)    
€ strengthened +0.0018 versus £ (-0.15%) at 1.1789 (€: YTD: 0.20%; 5YR: 13.3%)    
$ strengthened +0.0019 versus £ (+0.15%) at 1.3013 ($: YTD: 1.88%; 5YR: 14.9%)    
¥ strengthened +0.1200 versus $ (+0.11%) at 109.3400 (¥: YTD: 0.70%; 5YR: 7.3%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.35 (+0.66%) at 53.40 (YTD: -19.60%; 5YR: -4.7%)    
WTI Crude ($/bbl) down -0.50 (-1.00%) at 49.61 (YTD: -18.75%; 5YR: 2.4%)    
Gold ($/ozt) up +10.68 (+0.69%) at 1561.41 (YTD: 2.53%; 5YR: 23.7%)    
Copper ($/mt) up +93.00 (+1.68%) at 5618.00 (YTD: -9.01%; 5YR: -1.5%)    
    
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