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7th April 2020

07/04/2020

Market Data and Morning Chat

Morning Chat

Sweet dreams were mostly made of this: Who am I to disagree, seeing nearly 90% of UK stocks green is a pleasant sight. Seeing robust gains in indices additionally so, and gains were robust.  European indices up 6-7%, bar the UK only rising 4% (like Japan), while US equities jumped around 7%. The driver? Lower new case levels across Italy, Spain, France & Germany as well as a one-day drop in the US too. But there’s a nightmare also, Boris Johnson was moved precautionarily into the ICU, like political friends and opponents alike, we wish him the speediest of recoveries
 
The first cut, or do you want to break up? The second major problem after Covid-19 remains oil. Economic constrictions from global sequestrations is thought to have trimmed 4-10% off demand from a precariously-balanced equilibrium. Now stored volumes are soaring.  Throw in a possible 4% supply increase and the oil market dislocate expands massively to 8-14%, triggering the collapse we’ve seen.  No wonder Trump’s signalling of an imminent production-cutting deal lifted prices, but yesterday’s delay of the OPEC+ meeting to Thursday dropped them again. We’ll just have to wait for either a concerted production cut or an on-going destructive tiff
 
When tomorrow comes: There were a number of weakened economic indicators yesterday – falling German factory orders, reduced construction PMIs (sentiment indices), 44% lower new UK cars sales in the year to March and 25% lower auto production in Mexico. Yet the markets dismissed them and rallied robustly. Certainly, the gains were highly unlikely to be in anticipation of today’s US job openings JOLTS (still forecast at 6.6million openings), or tomorrow’s Japanese expected 2.7% decline in machinery orders or even the US FOMC minutes.  Instead, the moves came in anticipation of a return to some form of normality down the road.  
 
That’s mostly your lot as market futures are pricing little change in today,
… well, aside from 1-2% or so gains in Asian equities this morning following US the gains
… oh, and unless EU Ministers meeting today endorse a possible £440billion stimulus plan
… or if there’s a reaction to Germany’s today's unexpected +0.3% rise in industrial production
… and, don’t forget gold – it’s over $1650 again & it’s closed higher only three times this year
Rolls-Royse (+18.3%), analyst-favorite Melrose (+17.9%) & Meggitt (+15.5%) amid UK winners 
… while hotels (MGM +22.0%, Marriot’s +19.5%), cruise-lines & retailers were big US gainers

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +58.74 (+5.52%) at 1,123 (YTD: -18.36%; 5YR: 21.6%)
MSCI AC World Equities (USD) up +445.84 (+5.89%) at 8,014 (YTD: -19.69%; 5YR: 20.9%)
Barclays Global Aggregate Bonds down -1.15 (-0.23%) at 507 (YTD: -0.92%; 5YR: 12.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +175.03 (+7.03%) at 2,664 (YTD: -17.55%; 5YR: 28.3%)
NASDAQ up +540.16 (+7.33%) at 7,913 (YTD: -11.81%; 5YR: 61.2%)
Euro STOXX 50 up +132.98 (+4.99%) at 2,796 (YTD: -25.34%; 5YR: -25.8%)
FTSE 100 up +166.89 (+3.08%) at 5,582 (YTD: -25.99%; 5YR: -19.8%)
CAC up +191.56 (+4.61%) at 4,346 (YTD: -27.30%; 5YR: -15.6%)
DAX up +549.40 (+5.77%) at 10,075 (YTD: -23.96%; 5YR: -16.9%)
Nikkei 225  up +189.92 (+1.02%) at 18,766 (YTD: -20.67%; 5YR: -4.5%)
Hang Seng up +131.80 (+0.55%) at 23,881 (YTD: -15.29%; 5YR: -5.5%)
MSCI Emerging Markets up +22.11 (+2.66%) at 854 (YTD: -23.40%; 5YR: -15.1%)
 
Selected Government Bond Yields
US 2 Year up +0.01 at 0.27 (began the year at 1.57; 5 years ago it was 0.52)
US 10 Year up +0.02 at 0.69 (began the year at 1.92; 5 years ago it was 1.88)
UK 10 Year up +0.02 at 0.33 (began the year at 0.82; 5 years ago it was 1.58)
Germany 10 Year down 0.00 at -0.43 (began the year at -0.19; 5 years ago it was 0.19)
France 10 Year down 0.00 at 0.06 (began the year at 0.12; 5 years ago it was 0.47)
Italy 10 Year down 0.00 at 1.49 (began the year at 1.41; 5 years ago it was 1.24)
Japan 10 Year down 0.00 at 0.00 (began the year at -0.02; 5 years ago it was 0.35)
Barclays EM Basket up +0.01 at 4.46 (began the year at 4.27; 5 years ago it was 4.92)
 
Selected Currencies
$ weakened -0.0025 versus € (-0.23%) at 1.0827 ($: YTD: 3.58%; 5YR: 0.2%)
€ strengthened +0.0060 versus £ (-0.53%) at 1.1333 (€: YTD: 4.24%; 5YR: 20.8%)
$ strengthened +0.0036 versus £ (+0.29%) at 1.2270 ($: YTD: 7.49%; 5YR: 17.4%)
¥ strengthened +0.2500 versus $ (+0.23%) at 108.7700 (¥: YTD: 0.17%; 5YR: 10.6%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.81 (+2.89%) at 28.86 (YTD: -56.55%; 5YR: -50.1%)
WTI Crude ($/bbl) down -2.26 (-7.97%) at 26.08 (YTD: -57.29%; 5YR: -50.0%)
Gold ($/ozt) up +8.03 (+0.49%) at 1660.32 (YTD: 9.03%; 5YR: 37.1%)
Copper ($/mt) up +44.50 (+0.92%) at 4884.00 (YTD: -20.89%; 5YR: -18.3%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros