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6th March 2020

06/03/2020

Market Data and Morning Chat

Morning Chat

Still feeling woozy with Covid-19: The number of Chinese Covid-19 cases barely changed, though the number recovered rose significantly.  Internationally, though, new cases grew by a not-insignificant 2½ thousand and that was the focus for investors.  Once again markets were defined by the switch from equities to the “safe haven” assets such as gold and US treasuries. Gold climbed another 2.3% to $1,675. The US 10-year sank another 0.14% (the UK 10-year yield fell half that much down 0.06%) and equities slipped back.  Hopefully today’s non-farm payrolls will change the focus, but for now investors are still bugged by coronavirus.

… and then there were three: Over the last few days the race to select the Democratic nominee for President has transformed dramatically. There were more than twenty five candidates at the beginning of the year, but with Elizabeth Warren dropping out of the race yesterday (but not supporting Sanders, yet), the race has narrowed to three – Joe Biden, Bernie Sanders and Tulsi Gabbard, and to be blunt, Social Democrat Tulsi Gabbard is way, way behind. So it’s a straight choice between the Liberal wing under Biden, or the Social Democrat wing under Bernie (or Tulsi). Now the Democrats decide.

Brexit. What do the EU want from us? Level playing field. Oh yeah, yeah they want that. Yeah. That's true. And the supremacy of the European Court of Justice. All right, I'll grant you level playing field and ECJ supremacy are two things that the EU want. And the fishing rights. Well yes obviously the fishing rights... the fishing rights go without saying. But apart from the level playing field, ECJ supremacy and the fishing rights… criminal justice… law enforcement… governance. Yes... all right, fair enough, but beyond red lines, negotiators – as both sides agreed after the opening day of discussions – see several points of convergence on trade in goods, services, transport & energy.

Market futures are not painting a pretty picture at the moment with declines across the board
Some good news though, German industrial orders jumped 5.5% in January beating expectations
… it was the first rise since October last year and came on a 10.5% increase in foreign orders
Chinese domestic hotel bookings are up 40% over the week with 90% occupancy rates expected
… meanwhile, Chinese domestic flight demand increased 250% over the last week of February 
US non-farm payrolls data is out today with 175,000 new jobs & 3.6% unemployment expected

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -26.80 (-2.04%) at 1,290 (YTD: -6.20%; 5YR: 42.1%)
MSCI AC World Equities (USD) down -212.17 (-2.23%) at 9,310 (YTD: -6.70%; 5YR: 42.6%)
Barclays Global Aggregate Bonds up +1.66 (+0.32%) at 529 (YTD: 3.30%; 5YR: 19.2%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -106.18 (-3.39%) at 3,024 (YTD: -6.40%; 5YR: 46.0%)    
NASDAQ down -279.49 (-3.10%) at 8,739 (YTD: -2.61%; 5YR: 77.3%)    
Euro STOXX 50 down -56.98 (-1.67%) at 3,364 (YTD: -10.19%; 5YR: -7.0%)    
FTSE 100 down -110.16 (-1.62%) at 6,705 (YTD: -11.10%; 5YR: -3.0%)    
CAC down -103.79 (-1.90%) at 5,361 (YTD: -10.32%; 5YR: 8.0%)    
DAX down -182.97 (-1.51%) at 11,945 (YTD: -9.84%; 5YR: 3.4%)    
Nikkei 225  down -579.37 (-2.72%) at 20,750 (YTD: -12.29%; 5YR: 9.4%)    
Hang Seng down -619.47 (-2.31%) at 26,148 (YTD: -7.24%; 5YR: 8.2%)    
MSCI Emerging Markets up +1.53 (+0.15%) at 1,039 (YTD: -6.76%; 5YR: 7.0%)    
    
Selected Government Bond Yields    
US 2 Year down -0.10 at 0.49 (began the year at 1.57; 5 years ago it was 0.72)    
US 10 Year down -0.10 at 0.81 (began the year at 1.92; 5 years ago it was 2.24)    
UK 10 Year down -0.04 at 0.33 (began the year at 0.82; 5 years ago it was 1.95)    
Germany 10 Year down -0.03 at -0.71 (began the year at -0.19; 5 years ago it was 0.39)
France 10 Year up +0.01 at -0.35 (began the year at 0.12; 5 years ago it was 0.69)    
Italy 10 Year up +0.06 at 1.13 (began the year at 1.41; 5 years ago it was 1.31)    
Japan 10 Year down -0.02 at -0.13 (began the year at -0.02; 5 years ago it was 0.39)    
Barclays EM Basket down -0.02 at 3.77 (began the year at 4.27; 5 years ago it was 5.17)
    
Selected Currencies    
$ weakened -0.0020 versus € (-0.18%) at 1.1234 ($: YTD: -0.04%; 5YR: -3.5%)    
€ weakened -0.0010 versus £ (+0.09%) at 1.1548 (€: YTD: 2.29%; 5YR: 20.1%)    
$ weakened -0.0033 versus £ (-0.26%) at 1.2972 ($: YTD: 2.19%; 5YR: 13.9%)    
¥ strengthened +0.3600 versus $ (+0.34%) at 105.9000 (¥: YTD: -2.53%; 5YR: 14.2%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.54 (-1.08%) at 49.45 (YTD: -25.55%; 5YR: -16.7%)    
WTI Crude ($/bbl) down -0.88 (-1.88%) at 45.90 (YTD: -24.83%; 5YR: -9.6%)    
Gold ($/ozt) up +2.22 (+0.13%) at 1669.38 (YTD: 9.62%; 5YR: 43.3%)    
Copper ($/mt) down -10.00 (-0.18%) at 5674.00 (YTD: -8.10%; 5YR: -2.8%)    
   

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros