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7th July 2020

07/07/2020

Market Data and Morning Chat

Morning Chat

Something to buy into and build on: China’s market laid a foundation of positivity, but it was still construction PMI day in Europe – and there were some retail sales releases too. So recall, a level over 50 for a Purchasing Manager Index is seen as expansionary. Only Italy’s construction PMI was expected to be so optimistic yesterday. It was, but so too France’s (53.5) and Britain’s (55.3) (Just Germany’s disappointed against forecasts and 50).  Plus, the  +17.8% European retail sales number beat the +15.0% forecast with France registering a massive 25.6% sales resurgence all of which drove European markets higher.
 
Investors See More: The USA looked to a different trio of letters with the ISM non-manufacturing release yesterday. The Institute for Supply Management survey has run since 1997 and it’s always highly anticipated. So it was great news when they announced the non-manufacturing PMI rose to 57.1 – the first increase after two months of decline – trouncing the 50.1 estimate and it registered the biggest single-month leap ever. Add also, business activity rocketed to 66 versus May’s 41 and the 49 forecast.  Solid numbers all round that overcame disappointing Covid-19 case data helping to push US equities a little further ahead. 
 
Frank discussion: 
Last month the Banque De France expected the French economy to contract in both Q1 and Q2, but begin to recover in Q3. That outlook hasn’t changed, but the Banque is considering revisiting the scale of their expectations. Given data like the muted Covid-19 case rate, the massive surge in retail sales and June’s robust PMI numbers racing above 50 across the board (services, manufacturing and construction), it’s no wonder. They now believe the economy is seeing a faster-than-expected recovery and could expand by 14% in Q3 - almost reversing Q2’s revised -14% estimate, which is great news.
 
However, after yesterday’s gains, the equity market futures are stopping for breath down ¼-½%
… while Chinese equities continue rising, up 1.9% this morning on treble the usual volume
German industrial production turns up again, rising 7.8%, though less than the 10% hoped for
Japan’s May household spending declines-0.1%, slowing to lowest yearly pace in two decades
Samsung (.2.2%) down despite cashing in chip sales that beat forecasts & a 23% rise in profits
LVMH (+1.8%) a little closer to bagging Tiffany an the Australians approve takeover bid

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +22.17 (+1.68%) at 1,345 (YTD: -2.19%; 5YR: 48.5%)
MSCI AC World Equities (USD) up +162.61 (+1.70%) at 9,703 (YTD: -2.77%; 5YR: 48.6%)
Barclays Global Aggregate Bonds up +1.38 (+0.26%) at 529 (YTD: 3.42%; 5YR: 19.9%)
 
Selected Equity Indices (Capital returns)

S&P 500 up +49.71 (+1.59%) at 3,180 (YTD: -1.58%; 5YR: 52.8%)
NASDAQ up +226.02 (+2.21%) at 10,434 (YTD: 16.28%; 5YR: 108.8%)
Euro STOXX 50 up +55.65 (+1.69%) at 3,350 (YTD: -10.55%; 5YR: 1.7%)
FTSE 100 up +128.64 (+2.09%) at 6,286 (YTD: -16.66%; 5YR: -2.3%)
CAC up +74.37 (+1.49%) at 5,082 (YTD: -15.00%; 5YR: 10.4%)
DAX up +205.27 (+1.64%) at 12,733 (YTD: -3.89%; 5YR: 19.3%)
Nikkei 225  down -142.25 (-0.63%) at 22,572 (YTD: -4.58%; 5YR: 10.8%)
Hang Seng down -137.01 (-0.52%) at 26,202 (YTD: -7.05%; 5YR: 4.9%)
MSCI Emerging Markets up +27.41 (+2.65%) at 1,061 (YTD: -4.86%; 5YR: 14.0%)
 
Selected Government Bond Yields

US 2 Year up +0.00 at 0.16 (began the year at 1.57; 5 years ago it was 0.59)
US 10 Year down 0.00 at 0.67 (began the year at 1.92; 5 years ago it was 2.26)
UK 10 Year up +0.01 at 0.20 (began the year at 0.82; 5 years ago it was 1.83)
Germany 10 Year up +0.00 at -0.43 (began the year at -0.19; 5 years ago it was 0.64)
France 10 Year up +0.00 at -0.12 (began the year at 0.12; 5 years ago it was 1.13)
Italy 10 Year down 0.00 at 1.24 (began the year at 1.41; 5 years ago it was 2.27)
Japan 10 Year down 0.00 at 0.03 (began the year at -0.02; 5 years ago it was 0.45)
Barclays EM Basket up +0.01 at 3.79 (began the year at 4.27; 5 years ago it was 5.41)
 
Selected Currencies
$ strengthened +0.0003 versus € (+0.03%) at 1.1304 ($: YTD: -0.67%; 5YR: -3.3%)
€ weakened -0.0012 versus £ (+0.11%) at 1.1054 (€: YTD: 6.87%; 5YR: 27.6%)
$ weakened -0.0010 versus £ (-0.08%) at 1.2495 ($: YTD: 5.79%; 5YR: 19.0%)
¥ weakened -0.0500 versus $ (-0.05%) at 107.4900 (¥: YTD: -1.01%; 5YR: 13.8%)
 
Selected Commodities

Brent Crude ($/bbl) down -0.30 (-0.71%) at 42.18 (YTD: -36.50%; 5YR: -25.3%)
WTI Crude ($/bbl) down -0.02 (-0.05%) at 40.63 (YTD: -33.46%; 5YR: -22.7%)
Gold ($/ozt) down -0.13 (-0.01%) at 1783.36 (YTD: 17.11%; 5YR: 54.2%)
Copper ($/mt) up +111.50 (+1.85%) at 6128.50 (YTD: -0.74%; 5YR: 9.6%)
 
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five-year return

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros