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6th May 2020

06/05/2020

Market Data and Morning Chat

Morning Chat

Contango in the night: Coronavirus aside – not to dismiss it lightly – the oil supply/demand equilibrium is probably the next biggest issue. When Saudi and Russia had their spat, oil prices sunk deeper than an offshore well and energy stocks tumbled. Since the March 23 low, energy stocks have led markets (start from a low enough base). More, oil prices rose another 20% or so yesterday. Brent has topped $30/barrel and the June/July discount or contango tightened as the API reported an inventory build of only 8.44million barrels while various reports show well-head production cuts and notable increases in road traffic.

Welcome to the room…. Clarida: Investors might not have a big love for Fed Vice-Chairman Richard Clarida after his remarks trimmed yesterday’s equity gains. Markets had bubbled up on the improving oil picture and Covid-19 data with the US market up 2% or so.  Equities promptly tumbled back over 1% on Clarida’s CNBC interview. You might be mystified. What did he say? His objective tone was a balance of good and bad. The bad; he sees “more policy support will be needed” including, possibly, even more government stimulus spending.  The good; he optimistically sees growth returning in the third quarter.

7 wonders: Earnings season continues. Wayfair (+23.9%) leapt as sales soared – seems we’re all refurnishing under lockdown… or sating binge-watch desires with Disney’s (-4.3%) Disney+ hitting 54million subscribers – but, ouch, closed parks hurt. Maybe you’re videogaming – Activision (+8.1%) nearly doubled Q1 estimates. Board games are also prospering – Monopoly sales surged 40% - lifting Hasbro’s (-2.7%) numbers, although their eOne deal bruised them.  We’re cooking at home more – obviously – growing Sprouts Farmers Markets’ (+3.4%) numbers while the beef shortages helped Beyond Meat’s (+5.4%) sales. Oh, and driving less – cutting traffic accidents (but speeding’s up) giving a helping hand to Allstate (+1.8%). 
 
Equity futures are improving, the US is up, and Europe might be when you read this
,,, and after a five-day holiday – remember those – China trades flat, which is good
Ares Capital (+2.3%) comments from the mezzanine that Q1 was ok – dividend reaffirmed
Regeneron (+6.0%) avoids flaky results as eczema treatment Dupixent drives growth
… and their Covid-19 antibody treatment could be ready by the fall – fingers crossed
Total (+7.9%) drove the whole European market on results and unchanged dividend
Hello Fresh (+10.0%) really delivered on results to beat expectations aided by lockdowns
British Chamber of Commerce survey optimistic depending on social distancing rules..
… as most firms could reopen within a week of restrictions being lifted, 90% in three weeks 

 
Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +12.08 (+1.02%) at 1,197 (YTD: -12.96%; 5YR: 30.0%)
MSCI AC World Equities (USD) up +87.80 (+1.03%) at 8,611 (YTD: -13.71%; 5YR: 28.9%)
Barclays Global Aggregate Bonds down -0.52 (-0.10%) at 517 (YTD: 1.14%; 5YR: 15.0%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +25.70 (+0.90%) at 2,868 (YTD: -11.22%; 5YR: 37.9%)
NASDAQ up +98.41 (+1.13%) at 8,809 (YTD: -1.82%; 5YR: 79.1%)
Euro STOXX 50 up +59.43 (+2.11%) at 2,876 (YTD: -23.21%; 5YR: -19.2%)
FTSE 100 up +95.64 (+1.66%) at 5,849 (YTD: -22.45%; 5YR: -15.6%)
CAC up +104.90 (+2.40%) at 4,483 (YTD: -25.01%; 5YR: -10.0%)
DAX up +262.66 (+2.51%) at 10,729 (YTD: -19.02%; 5YR: -5.5%)
Nikkei 225  down -574.34 (-2.84%) at 19,619 (YTD: -17.07%; 5YR: 0.4%)
Hang Seng up +213.07 (+0.89%) at 24,082 (YTD: -14.57%; 5YR: -12.9%)
MSCI Emerging Markets up +7.76 (+0.87%) at 896 (YTD: -19.64%; 5YR: -13.9%)
 
Selected Government Bond Yields
US 2 Year up +0.01 at 0.19 (began the year at 1.57; 5 years ago it was 0.64)
US 10 Year up +0.03 at 0.66 (began the year at 1.92; 5 years ago it was 2.24)
UK 10 Year down -0.03 at 0.21 (began the year at 0.82; 5 years ago it was 1.98)
Germany 10 Year up +0.00 at -0.58 (began the year at -0.19; 5 years ago it was 0.59)
France 10 Year down 0.00 at -0.07 (began the year at 0.12; 5 years ago it was 0.90)
Italy 10 Year down 0.00 at 1.86 (began the year at 1.41; 5 years ago it was 1.91)
Japan 10 Year up +0.01 at -0.03 (began the year at -0.02; 5 years ago it was 0.36)
Barclays EM Basket down 0.00 at 3.84 (began the year at 4.27; 5 years ago it was 5.11)
 
Selected Currencies
$ strengthened +0.0003 versus € (+0.03%) at 1.0837 ($: YTD: 3.49%; 5YR: 4.3%)
€ strengthened +0.0007 versus £ (-0.06%) at 1.1471 (€: YTD: 2.98%; 5YR: 17.3%)
$ strengthened +0.0010 versus £ (+0.08%) at 1.2432 ($: YTD: 6.27%; 5YR: 18.4%)
¥ strengthened +0.1600 versus $ (+0.15%) at 106.3500 (¥: YTD: -2.10%; 5YR: 12.5%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.97 (-3.43%) at 27.30 (YTD: -58.90%; 5YR: -58.8%)
WTI Crude ($/bbl) up +4.17 (+20.45%) at 24.56 (YTD: -59.78%; 5YR: -59.3%)
Gold ($/ozt) down -0.46 (-0.03%) at 1702.21 (YTD: 11.78%; 5YR: 43.0%)
Copper ($/mt) up +35.00 (+0.68%) at 5158.00 (YTD: -16.46%; 5YR: -20.4%)
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros