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7th May 2020

07/05/2020

Market Data and Morning Chat

Morning Chat

Idle concerns: Another day seeing equities fade at the close leaving mixed results – the UK, say, flat, the tech-y side of the States up, the other side – plus Europe – down (Japan’s still on hols).  The pessimistic turn came on the release of the ADP employment survey. The big one is today’s non-farm payrolls, but the ADP does foreshadow – and it was a long shadow, with employment falling by over 20million, three quarters of which came out of services, and, unsurprisingly, over half of that was from retail & hospitality employment. Now the question is how quickly they return to work.

Early parole or time served? Quickly enough maybe. Europe is moving apace to ease lockdown restrictions explaining some market buoyancy. Germany’s looking to open up restaurants, shops and even the Bundesliga on a phased basis, although social distancing requirements remain until June 5 (should make it easy to pass to an open player). Denmark’s looking at an even quicker release. The Dutch are trimming restrictions allowing hairdressers and beauty parlours to open, snipping a week off their schedule. Even Boris has caught the fever of the moment (too soon?) saying he wants “to get going with some measures on Monday”.

Speaking of carbon sequestration: Covid-19 lockdowns may not be what environmentalists had in mind by carbon sequestration, but the global economic shut-down has had a significant carbon impact – more so when an economy is less reliant on oil & coal energy. The International Energy Agency’s April 2020 Global Energy Demand report forecasts total energy demand falling 6% this year with electricity demand down 5% and a near-8% decline in CO2 emissions. They note renewables are the only energy source set to grow, but “greater investments and smarter policies are needed to keep electricity supplies secure” and dislodge fossil fuel usage.
 
Happily, despite the tail-end drift yesterday, the equity futures are up this morning
… While Japan is flat which is pretty good after a week off and the market moves
… and China’s exports rallied – yes rallied – 8.2%. Estimates called for a 14% fall!
The Bank of England met today – the pound rebounds from weakness as 0.1% rate held
Novo-Nordisk (+0.6) is sweet enough as diabetes drug maintains strong sales in Q1
BMW (-5.4%) swerves to a lower profit and reduced guidance as the delay new factory
Italian bank Unicredit (0.8%) posts £2.4billion loss as they too follow the provision trend
Despite weakness in Q1, PayPal (+2.3%)improves as they forecast a stronger Q2
CVS (-1.3%) weaker despite strong Q1 driven by an injection of prescription gains
General Motors (+2.6%) picks up on a pick-up in pick-up sales though profits are down
Investors get exercised over Peloton’s (+16.4%) covid-19-aided 66% jump in sales
Pioneer Natural Resources (-0.8%) maintains a solid free cash flow on cost cutting

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -3.97 (-0.33%) at 1,193 (YTD: -13.24%; 5YR: 29.6%)
MSCI AC World Equities (USD) down -44.44 (-0.52%) at 8,566 (YTD: -14.16%; 5YR: 28.5%)
Barclays Global Aggregate Bonds down -1.92 (-0.37%) at 516 (YTD: 0.76%; 5YR: 14.8%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -20.02 (-0.70%) at 2,848 (YTD: -11.83%; 5YR: 36.4%)
NASDAQ up +45.27 (+0.51%) at 8,854 (YTD: -1.32%; 5YR: 79.0%)
Euro STOXX 50 down -32.15 (-1.12%) at 2,844 (YTD: -24.07%; 5YR: -20.0%)
FTSE 100 up +4.34 (+0.07%) at 5,854 (YTD: -22.39%; 5YR: -15.0%)
CAC down -49.75 (-1.11%) at 4,433 (YTD: -25.84%; 5YR: -10.7%)
DAX down -123.26 (-1.15%) at 10,606 (YTD: -19.95%; 5YR: -7.0%)
Nikkei 225  up +17.01 (+0.09%) at 19,636 (YTD: -16.99%; 5YR: 0.5%)
Hang Seng down -187.50 (-0.78%) at 23,950 (YTD: -15.04%; 5YR: -12.2%)
MSCI Emerging Markets up +2.96 (+0.33%) at 899 (YTD: -19.37%; 5YR: -12.3%)
 
Selected Government Bond Yields
US 2 Year down 0.00 at 0.18 (began the year at 1.57; 5 years ago it was 0.63)
US 10 Year down -0.01 at 0.69 (began the year at 1.92; 5 years ago it was 2.18)
UK 10 Year up +0.03 at 0.23 (began the year at 0.82; 5 years ago it was 1.92)
Germany 10 Year up +0.00 at -0.51 (began the year at -0.19; 5 years ago it was 0.59)
France 10 Year down 0.00 at 0.01 (began the year at 0.12; 5 years ago it was 0.89)
Italy 10 Year down 0.00 at 1.97 (began the year at 1.41; 5 years ago it was 1.77)
Japan 10 Year up +0.02 at -0.01 (began the year at -0.02; 5 years ago it was 0.43)
Barclays EM Basket down 0.00 at 3.84 (began the year at 4.27; 5 years ago it was 5.10)
 
Selected Currencies
$ strengthened +0.0015 versus € (+0.14%) at 1.0792 ($: YTD: 3.89%; 5YR: 4.2%)
€ strengthened +0.0016 versus £ (-0.14%) at 1.1418 (€: YTD: 3.46%; 5YR: 18.3%)
$ strengthened +0.0036 versus £ (+0.29%) at 1.2322 ($: YTD: 7.09%; 5YR: 19.0%)
¥ weakened -0.2800 versus $ (-0.26%) at 106.2900 (¥: YTD: -2.15%; 5YR: 12.7%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.06 (-0.22%) at 27.44 (YTD: -58.69%; 5YR: -57.2%)
WTI Crude ($/bbl) down -0.57 (-2.32%) at 23.99 (YTD: -60.71%; 5YR: -60.6%)
Gold ($/ozt) up +4.50 (+0.27%) at 1690.87 (YTD: 11.03%; 5YR: 43.0%)
Copper ($/mt) up +40.00 (+0.78%) at 5198.00 (YTD: -15.81%; 5YR: -18.7%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros