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8th July 2020

08/07/2020

Market Data and Morning Chat

Morning Chat

The pause that refreshes, hopefully: Global equities have ridden a decent streak of late posting gains five of the last six days and rallying over 3% in sterling terms, 5% in dollars. So a small trace-back – a pause – was to be expected, especially with disquieting Covid-19 data. Moreover, roll in yesterday’s news of May’s near-stationary Japanese household spending rate rather than the expected upswing, German industrial production that wasn’t as upbeat as hoped, and the French balance of trade tipping more than hoped toward imports than exports and the market slip was likely, even with Italian retail sales surging 24.3%.
 
Look up America: Along with those decidedly stronger-than-forecast Italian retail sales (expected at only 8.6%), May also saw a surprising surge in the US Job Openings and Labour Turnover Survey numbers.  The consensus view called for a further slide from 4.995million to 4.85million. Instead, the JOLTS level rose to 5.397million on strong gains in the accommodation & food services, retail and construction sectors with a solid 2.4million jump in hires (the series-best pace). Unfortunately, investors appeared focussed on the lower oil price after a marginal inventory build and the upcoming bank earnings as the energy & financials sectors led declines.
 
It’s the “real” thing: Gold gleamed however, cruising through Monday’s apparent $1788 ceiling to quickly crest at $1,797 – nearly $10 higher.  It’s maybe only a rough ½% gain but significant when you consider the $1788-$1790 level stopped gold earlier this week and $1,796 was the 2012 high Now, the all-time high is less than $25 away. Investors have taken a shine to the metal as the opportunity cost of holding gold – the prevailing real interest rate, the yield less inflation - languishes near zero.  Indeed, the real US 10-year bond yield even traded in negative territory as recently as April.  
 
 
Equity market futures are taking a deeper breath and signalling another ¼-¾% down today
 
… and with limited economic data – bar EIA oil inventories – there’s little to change the mood
 
Chancellor Rishi Sunak offers a mini-budget today which is expected to focus on jobs protection
 
Covid-19 infections among Chilean copper miners have tightened global copper supplies…
 
… pushing copper prices up to start-of-the-year levels with spot prices higher than future prices
 
… Meanwhile, Brazil’s President Jair Bolsonaro tested positive for the “little flu” he dismissed
 
Aluminium supplies in LME-tracked warehouses (so with an “i”) are seeing May orders up 22% 
 
 Whitbread (-5.5%) less ‘ale & hearty as Barclaycard shows weak weekend hospitality data
 
… with sector-wide sales only 7% up on last weekend and down 45% on last year’s level
 
Walmart (+6.8%) rings-up best gain in a quarter launch of Amazon Prime-like Walmart+ nears

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -11.39 (-0.85%) at 1,334 (YTD: -3.02%; 5YR: 49.3%)
MSCI AC World Equities (USD) down -89.74 (-0.92%) at 9,613 (YTD: -3.67%; 5YR: 48.7%)
Barclays Global Aggregate Bonds up +0.14 (+0.03%) at 529 (YTD: 3.44%; 5YR: 19.4%)
 
Selected Equity Indices (Capital returns)

S&P 500 down -34.40 (-1.08%) at 3,145 (YTD: -2.65%; 5YR: 53.7%)
NASDAQ down -89.76 (-0.86%) at 10,344 (YTD: 15.28%; 5YR: 110.7%)
Euro STOXX 50 down -28.47 (-0.85%) at 3,322 (YTD: -11.31%; 5YR: -0.2%)
FTSE 100 down -96.04 (-1.53%) at 6,190 (YTD: -17.93%; 5YR: -4.6%)
CAC down -37.78 (-0.74%) at 5,044 (YTD: -15.63%; 5YR: 8.7%)
DAX down -116.65 (-0.92%) at 12,617 (YTD: -4.77%; 5YR: 17.4%)
Nikkei 225  down -151.92 (-0.67%) at 22,463 (YTD: -5.05%; 5YR: 13.8%)
Hang Seng up +45.27 (+0.17%) at 26,021 (YTD: -7.69%; 5YR: 10.6%)
MSCI Emerging Markets down -7.95 (-0.75%) at 1,053 (YTD: -5.57%; 5YR: 16.4%)
 
Selected Government Bond Yields

US 2 Year up +0.00 at 0.16 (began the year at 1.57; 5 years ago it was 0.54)
US 10 Year unchanged at 0.64 (began the year at 1.92; 5 years ago it was 2.19)
UK 10 Year down -0.02 at 0.18 (began the year at 0.82; 5 years ago it was 1.89)
Germany 10 Year down -0.02 at -0.45 (began the year at -0.19; 5 years ago it was 0.67)
France 10 Year down -0.02 at -0.14 (began the year at 0.12; 5 years ago it was 1.12)
Italy 10 Year down 0.00 at 1.20 (began the year at 1.41; 5 years ago it was 2.22)
Japan 10 Year down -0.02 at 0.02 (began the year at -0.02; 5 years ago it was 0.41)
Barclays EM Basket up +0.01 at 3.79 (began the year at 4.27; 5 years ago it was 5.39)
 
Selected Currencies
$ strengthened +0.0024 versus € (+0.21%) at 1.1266 ($: YTD: -0.33%; 5YR: -2.0%)
€ weakened -0.0008 versus £ (+0.07%) at 1.1132 (€: YTD: 6.12%; 5YR: 24.7%)
$ strengthened +0.0017 versus £ (+0.14%) at 1.2543 ($: YTD: 5.43%; 5YR: 18.2%)
¥ weakened -0.0400 versus $ (-0.04%) at 107.5600 (¥: YTD: -0.95%; 5YR: 12.3%)
 
Selected Commodities

Brent Crude ($/bbl) down -0.12 (-0.28%) at 42.34 (YTD: -36.25%; 5YR: -24.8%)
WTI Crude ($/bbl) down -0.01 (-0.02%) at 40.62 (YTD: -33.48%; 5YR: -22.4%)
Gold ($/ozt) down -2.69 (-0.15%) at 1793.13 (YTD: 17.75%; 5YR: 54.3%)
Copper ($/mt) up +59.50 (+0.97%) at 6188.00 (YTD: 0.23%; 5YR: 15.9%)

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