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8th June 2020

14/05/2020

Market Data and Morning Chat

Morning Chat

Good day sunshine: Wow, what a week. Equities surged with European markets adding more than an average year’s gain in five days with the US and Japan not far behind. Certainly, Friday shone thanks to the surprisingly massive gain in US non-farms employment data.  Analysts had carefully assessed the situation and forecast payrolls should fall by 7.5million – they rose 2.5million instead with half the rebound coming from the hard-hit leisure sector.  Canada’s numbers were also proportionately brighter. In fairness to economists, it’s the speed and scale of the moves and limited real-time data that makes forecasts so erratic right now.

Tomorrow never knows: The question now is if broader economic data this week might confirm a quicker recovery. Unfortunately, rearward looking data like Japan’s just-out Q1 GDP number is past data – even though it confirmed Japan’s technically entered a recession (2 quarters of negative growth). French, German & Italian industrial production numbers (expected to be heavily negative numbers) and the US JOLTS report cover April, so that’s now “old” news. There’s loads of May inflation data, but it’s only marginally helpful. So, Thursday’s US initial jobless claims for June 6 – estimated at 1.5million – is probably the best indicator we’ll get.

Here, there & everywhere: There’s been a surge in testy demonstrations over the George Floyd killing. Here in the UK, Bristol protestors toppled Edward Colston’s statue and tossed in the harbour. In the US, protests have been widespread. But we’re now seeing polling on the issue. 10 in 12 Americans favour the action against the police officers involved. 7 in 12 think protestors’ anger fully justified, but only 2 in 12 think their actions fully justified with 10 in 12 saying it undermined their goals. Certainly it now makes law & order spending a key Presidential election issue for November.

Wednesday’s Fed rates meeting could also offer a bit of a jolt as they interpret Friday’s rise.
European equity futures are giving back some of last week’s gains, but the US & Japan are up
 The US trade-weighted dollar index has lost over 4% since the market low, ½ the Covid gain
 Energy was the powerhouse sector last week as OPEC+ moves to restrain production cheats
 Carnival (+19.8%) steams ahead, but while up 145% from low is over 60% down over Covid-19
 AstraZeneca as approached Gilead to inject the idea of a merger between the two companies
 New Zealand stops social distancing requirement from midnight tonight as cases drop to zero

 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +27.12 (+2.07%) at 1,336 (YTD: -2.88%; 5YR: 45.3%)
MSCI AC World Equities (USD) up +206.63 (+2.18%) at 9,697 (YTD: -2.83%; 5YR: 46.4%)
Barclays Global Aggregate Bonds down -0.90 (-0.17%) at 522 (YTD: 2.10%; 5YR: 18.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +81.58 (+2.62%) at 3,194 (YTD: -1.14%; 5YR: 53.6%)
NASDAQ up +198.27 (+2.06%) at 9,814 (YTD: 9.38%; 5YR: 95.4%)
Euro STOXX 50 up +122.62 (+3.76%) at 3,384 (YTD: -9.64%; 5YR: -2.4%)
FTSE 100 up +142.86 (+2.25%) at 6,484 (YTD: -14.03%; 5YR: -4.5%)
CAC up +185.81 (+3.71%) at 5,198 (YTD: -13.05%; 5YR: 7.0%)
DAX up +417.12 (+3.36%) at 12,848 (YTD: -3.03%; 5YR: 16.1%)
Nikkei 225  up +257.34 (+1.13%) at 23,121 (YTD: -2.26%; 5YR: 13.0%)
Hang Seng down -41.01 (-0.17%) at 24,729 (YTD: -12.28%; 5YR: -9.5%)
MSCI Emerging Markets up +13.86 (+1.40%) at 1,003 (YTD: -10.05%; 5YR: 2.6%)
 
Selected Government Bond Yields
US 2 Year up +0.01 at 0.21 (began the year at 1.57; 5 years ago it was 0.68)
US 10 Year up +0.01 at 0.90 (began the year at 1.92; 5 years ago it was 2.38)
UK 10 Year up +0.05 at 0.35 (began the year at 0.82; 5 years ago it was 2.05)
Germany 10 Year down 0.00 at -0.28 (began the year at -0.19; 5 years ago it was 0.88)
France 10 Year up +0.07 at 0.08 (began the year at 0.12; 5 years ago it was 1.21)
Italy 10 Year up +0.00 at 1.41 (began the year at 1.41; 5 years ago it was 2.26)
Japan 10 Year down 0.00 at 0.04 (began the year at -0.02; 5 years ago it was 0.49)
Barclays EM Basket up +0.06 at 4.07 (began the year at 4.27; 5 years ago it was 5.44)
 
Selected Currencies
$ strengthened +0.0007 versus € (+0.06%) at 1.1284 ($: YTD: -0.49%; 5YR: -0.5%)
€ weakened -0.0023 versus £ (+0.20%) at 1.1254 (€: YTD: 4.97%; 5YR: 21.1%)
$ weakened -0.0019 versus £ (-0.15%) at 1.2699 ($: YTD: 4.25%; 5YR: 17.0%)
¥ strengthened +0.2900 versus $ (+0.26%) at 109.4600 (¥: YTD: 0.80%; 5YR: 14.3%)
 
Selected Commodities
Brent Crude ($/bbl) up +1.09 (+2.65%) at 42.22 (YTD: -36.43%; 5YR: -31.3%)
WTI Crude ($/bbl) up +2.14 (+5.72%) at 39.55 (YTD: -35.23%; 5YR: -33.1%)
Gold ($/ozt) up +7.18 (+0.43%) at 1689.46 (YTD: 10.94%; 5YR: 44.1%)
Copper ($/mt) up +157.00 (+2.84%) at 5690.00 (YTD: -7.84%; 5YR: -4.2%)
 
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