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5th June 2020

05/06/2020

Market Data and Morning Chat

Morning Chat

Working for the Yankee dollar?
Global equity markets paused their rallying yesterday, some saw skids, suspended as they are between two key employment data points.  The first, Thursday’s initial jobless claim.  Estimates called for 1.83million and was effectively, though – after some optimism from the ADP data - disappointingly met at 1.88million.  Disappointing as initial claims have for weeks been stubbornly higher than hoped each time. The second is today’s non-farm payrolls. Again, influenced by the ADP data, forecasts anticipate a 7.5million decline – a third of last month’s 20.5million – and a 19.1% unemployment rate. Hopefully, like the ADP data, its lower.
 
A day In Europa
From the corner I bled with dismay – another stimulus salvo boomed across markets as the ECB announced a further €600billion addition to the Pandemic Emergency Purchase Program (PEPP) bringing the total to €1.35trillion. OK, dismay’s probably too strong, but it wasn’t enough to distract investors’ concentration on the employment numbers mainly as there’re calls already for more in September or so –  €600billion doesn’t cover all the bills European governments are going to have to pay through debt issuance. It has been enough though to keep the Euro strengthening against the dollar (and to an extent sterling).
 
Peaceful times?
Mostly peaceful protests continued in the US over the death of George Floyd as a memorial service was held in Minneapolis. Atlanta Mayor Keisha Bottoms addressed her crowds, also urging them to get tested for Covid-19 for gathering. Meanwhile, the four police officers involved were charged in court – one with second-degree murder, three with aiding & abetting. Two were granted $750,000 bail. The justice system in action.  President Trump was less active. New polls give Biden an 11% national lead, Florida’s massive 29 electoral votes are back in play, and Trump’s approval rating is down 4% from the early-April high.
 

But Biden pulls a Clinton gaffe claiming “10-15% of the population…aren’t very good people”
Today’s futures point to a positive day recovering yesterday’s lost ground plus a little more …
… with Germany’s DAX looking to hit positive territory year-to-date in sterling terms…
… thanks to a little help from the month-long rally in the value of the Euro
… while dividend futures show reduced income trading about 18-22% off pre-Covid-19 levels 
The Latest round of Brexit talks set to end without any signs of real progress
American Airlines (+41.1%) and United (+16.2%) take-off as flights added faster-than-expected
… as travel-related stocks like EasyJet (+6.2%) and BA’s IAG (+3.2%) lead the UK market
AstraZeneca, up 45% from March low, states Covid-19 vaccine may be ready by September…
… if the ongoing trials with 10,000 volunteers continues to show positive efficacy and safety

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -3.42 (-0.26%) at 1,308 (YTD: -4.85%; 5YR: 41.5%)
MSCI AC World Equities (USD) down -15.98 (-0.17%) at 9,490 (YTD: -4.90%; 5YR: 42.6%)
Barclays Global Aggregate Bonds up +0.81 (+0.15%) at 523 (YTD: 2.28%; 5YR: 19.2%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -10.52 (-0.34%) at 3,112 (YTD: -3.67%; 5YR: 48.7%)
NASDAQ down -67.10 (-0.69%) at 9,616 (YTD: 7.17%; 5YR: 89.7%)
Euro STOXX 50 down -7.92 (-0.24%) at 3,262 (YTD: -12.91%; 5YR: -7.1%)
FTSE 100 down -40.97 (-0.64%) at 6,341 (YTD: -15.92%; 5YR: -6.8%)
CAC down -10.40 (-0.21%) at 5,012 (YTD: -16.16%; 5YR: 1.9%)
DAX down -56.80 (-0.45%) at 12,431 (YTD: -6.18%; 5YR: 11.0%)
Nikkei 225  up +85.37 (+0.38%) at 22,781 (YTD: -3.70%; 5YR: 11.3%)
Hang Seng up +58.16 (+0.24%) at 24,424 (YTD: -13.36%; 5YR: -10.4%)
MSCI Emerging Markets up +0.78 (+0.08%) at 989 (YTD: -11.29%; 5YR: 0.7%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.19 (began the year at 1.57; 5 years ago it was 0.71)
US 10 Year up +0.01 at 0.83 (began the year at 1.92; 5 years ago it was 2.41)
UK 10 Year up +0.03 at 0.31 (began the year at 0.82; 5 years ago it was 2.08)
Germany 10 Year down 0.00 at -0.32 (began the year at -0.19; 5 years ago it was 0.84)
France 10 Year up +0.00 at -0.01 (began the year at 0.12; 5 years ago it was 1.16)
Italy 10 Year up +0.00 at 1.42 (began the year at 1.41; 5 years ago it was 2.24)
Japan 10 Year up +0.01 at 0.04 (began the year at -0.02; 5 years ago it was 0.49)
Barclays EM Basket up +0.02 at 4.00 (began the year at 4.27; 5 years ago it was 5.39)
 
Selected Currencies
$ weakened -0.0017 versus € (-0.15%) at 1.1346 ($: YTD: -1.04%; 5YR: -2.0%)
€ strengthened +0.0010 versus £ (-0.09%) at 1.1114 (€: YTD: 6.29%; 5YR: 23.5%)
$ weakened -0.0010 versus £ (-0.08%) at 1.2611 ($: YTD: 4.92%; 5YR: 17.4%)
¥ weakened -0.1900 versus $ (-0.17%) at 109.1600 (¥: YTD: 0.53%; 5YR: 15.0%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.26 (+0.67%) at 39.24 (YTD: -40.92%; 5YR: -36.9%)
WTI Crude ($/bbl) up +0.12 (+0.32%) at 37.41 (YTD: -38.73%; 5YR: -35.5%)
Gold ($/ozt) down -4.47 (-0.26%) at 1712.56 (YTD: 12.46%; 5YR: 46.6%)
Copper ($/mt) up +8.50 (+0.15%) at 5533.00 (YTD: -10.38%; 5YR: -6.5%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros