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6th July 2020

06/07/2020

Market Data and Morning Chat

Morning Chat

Stuck in the starting gate: Going into Friday UK equities were running a weekly gain of 1.3%. Coming out of Friday they were flat on the week having lost ground thanks to a lower oil price drilling a hole into BP & Royal Dutch’s shares and loan concerns proving telling for the banks. The UK may have seen a wider lockdown release on the weekend, but there’s a worry shoppers have only been tepidly hitting the high street so far, imperiling bank loans to retailers. Renewed Brexit news flow probably didn’t help either. Markets elsewhere though managed decent weekly gains.
 
 A matter of resurgency: 
To be fair, all European markets slipped on Friday while the US was closed. The economic news wasn’t bad, prompting concerns there’s a broader worry over loans as many European banks filled the bottom of Friday’ league table.  The key’s how strong the recovery looks.  Investors see a range of May data this week – Factory orders or industrial production from the likes of Germany, France, Italy & Spain, French retail sales and Japanese machinery orders – all are expected to show robust improvement.  Likewise construction PMIs. Be good too if US initial jobless claims were also better-than-hoped.
 
 What Huawei to go: 
Given UK equities declined 1.3% Friday, Vodafone’s 0.1% rally – albeit marginal – was good to see after news circulated over the UK looking to phase Huawei out of the national 5G network as soon as this year. More was confirmed over the weekend with a National Cybersecurity Centre report concluding US sanctions could make security risks impossible to control, so today could also be interesting for Vodafone. They’ve claimed 5G could be worth £1.5billion and barring Huawei would lead to significant delays, though Samsung’s apparently catching up.  Maybe banning Huawei’s not so tough a call after all.   
 
Equity futures are kicking the week off with decided gains led by a strong rally in Asia
China’s CSI300 index is leading the charge, up 4.3% today to a five-year high thanks to…
… capital market reforms and excess global liquidity according to state media report
However, Germany’s factory orders just out were a disappointing +10.4% versus +15% forecast
… but still a strong rebound from April’s -25.8% contraction and the Euro is still strengthening
… and gold is marginally lower today having eased back from last week’s $1,789 high
Lloyds bank CEO Horta-Osorio announced he will step down from his position next year

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +0.43 (+0.03%) at 1,323 (YTD: -3.80%; 5YR: 46.0%)
MSCI AC World Equities (USD) down -5.11 (-0.05%) at 9,540 (YTD: -4.40%; 5YR: 45.7%)
Barclays Global Aggregate Bonds up +0.29 (+0.05%) at 528 (YTD: 3.15%; 5YR: 19.6%)
 
Selected Equity Indices (Capital returns)

S&P 500 up +14.15 (+0.45%) at 3,130 (YTD: -3.12%; 5YR: 50.7%)
NASDAQ up +53.00 (+0.52%) at 10,208 (YTD: 13.76%; 5YR: 103.8%)
Euro STOXX 50 down -25.71 (-0.77%) at 3,294 (YTD: -12.04%; 5YR: -2.1%)
FTSE 100 down -83.06 (-1.33%) at 6,157 (YTD: -18.36%; 5YR: -5.8%)
CAC down -42.24 (-0.84%) at 5,007 (YTD: -16.24%; 5YR: 6.3%)
DAX down -80.28 (-0.64%) at 12,528 (YTD: -5.44%; 5YR: 15.0%)
Nikkei 225  up +426.82 (+1.91%) at 22,733 (YTD: -3.90%; 5YR: 13.0%)
Hang Seng up +735.38 (+2.90%) at 26,109 (YTD: -7.38%; 5YR: 3.5%)
MSCI Emerging Markets up +9.61 (+0.94%) at 1,033 (YTD: -7.32%; 5YR: 9.5%)
 
Selected Government Bond Yields

US 2 Year up +0.01 at 0.16 (began the year at 1.57; 5 years ago it was 0.59)
US 10 Year up +0.02 at 0.69 (began the year at 1.92; 5 years ago it was 2.29)
UK 10 Year up +0.00 at 0.19 (began the year at 0.82; 5 years ago it was 2.01)
Germany 10 Year down 0.00 at -0.43 (began the year at -0.19; 5 years ago it was 0.76)
France 10 Year up +0.00 at -0.11 (began the year at 0.12; 5 years ago it was 1.24)
Italy 10 Year down 0.00 at 1.25 (began the year at 1.41; 5 years ago it was 2.38)
Japan 10 Year up +0.02 at 0.04 (began the year at -0.02; 5 years ago it was 0.47)
Barclays EM Basket up +0.01 at 3.78 (began the year at 4.27; 5 years ago it was 5.43)
 
Selected Currencies

$ weakened -0.0045 versus € (-0.40%) at 1.1287 ($: YTD: -0.52%; 5YR: -1.9%)
€ strengthened +0.0022 versus £ (-0.20%) at 1.1069 (€: YTD: 6.72%; 5YR: 27.4%)
$ weakened -0.0024 versus £ (-0.19%) at 1.2493 ($: YTD: 5.81%; 5YR: 20.0%)
¥ weakened -0.1900 versus $ (-0.18%) at 107.7000 (¥: YTD: -0.82%; 5YR: 13.8%)
 
Selected Commodities

Brent Crude ($/bbl) up +0.26 (+0.61%) at 42.63 (YTD: -35.82%; 5YR: -23.4%)
WTI Crude ($/bbl) up +0.83 (+2.08%) at 40.65 (YTD: -33.43%; 5YR: -28.6%)
Gold ($/ozt) down -1.42 (-0.08%) at 1773.56 (YTD: 16.46%; 5YR: 51.3%)
Copper ($/mt) down -56.00 (-0.92%) at 6017.00 (YTD: -2.54%; 5YR: 4.5%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros