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9th March 2020

09/03/2020

Market Data and Morning Chat

Morning Chat 

A bad news / good news kind of week: So the spread of Covid-19 virus in Europe and the US has accelerated. Bad news. markets have reacted badly and we’ve seen European equities close the week 2-3% lower (save Italy, down nearly 5½%).  However, China appeared to be getting back to work – new cases have minimal and airline & hotel bookings have increased substantially. Good news. Oh, and Chinese equities gained on the week. Meanwhile in the US, aside from Covid-19, the 275,000 non-farm payrolls gain was decidedly better-than-expected. Oh, and US equities were also up on the week too.

… and next? Sorry, but Covid-19 is going to dominate headlines this week.  The question will be its extent and how quickly we might see any improvement in the situation.  It will take time to know. For now, Italy has quarantined 16million of its citizens in the Lombardy region for a month and France has banned gatherings of more than 1,000 people. However, this week we’ll also see if US inflation, UK monthly GDP or French & Italian industrial production show any significant changes (for good or ill). More, we’ll also get the first post-Brexit UK budget on the 11th.

Barreling downhill: Greens and environmentalists are not going to be pleased.  The OPEC+ meeting could not come to a compromise agreement over the weekend.  Assuming no subsequent agreement soon – and it is not looking that likely at the moment – Saudi Arabia, Russia and others will be able to increase production levels without constraint from April 1st.  Oil prices are down by a whopping 30% and are trading around $30 with wholesale gasoline and heating oil prices down over 15%.  It is certainly not going to help energy companies, but it will probably be a big relief to the hard-hit airlines. 

Equity futures paint an ugly picture today with Europe badly hit over Covid-19 and oil prices
… while the CSI300 index is down 3.4%, Hang Seng 4.3% and Japan’s Topix 5.6%
… meanwhile China recoded a lowly 40 new cases and nearly 59,000 recovered (72.7%) 
We have had German industrial production – a solid rebound up 3.0% versus +1.7% expected
… and their balance of trade improved on a seasonally adjusted basis

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -29.49 (-2.29%) at 1,261 (YTD: -8.34%; 5YR: 38.9%)
MSCI AC World Equities (USD) down -182.56 (-1.96%) at 9,128 (YTD: -8.53%; 5YR: 39.8%)
Barclays Global Aggregate Bonds up +6.01 (+1.14%) at 535 (YTD: 4.48%; 5YR: 20.5%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -51.57 (-1.71%) at 2,972 (YTD: -8.00%; 5YR: 42.9%)    
NASDAQ down -162.98 (-1.87%) at 8,576 (YTD: -4.42%; 5YR: 73.5%)    
Euro STOXX 50 down -131.51 (-3.91%) at 3,232 (YTD: -13.70%; 5YR: -10.5%)    
FTSE 100 down -242.88 (-3.62%) at 6,463 (YTD: -14.32%; 5YR: -6.0%)    
CAC down -221.99 (-4.14%) at 5,139 (YTD: -14.03%; 5YR: 4.1%)    
DAX down -402.85 (-3.37%) at 11,542 (YTD: -12.89%; 5YR: -0.3%)    
Nikkei 225  down -1050.99 (-5.07%) at 19,699 (YTD: -16.73%; 5YR: 4.8%)    
Hang Seng down -1020.67 (-3.90%) at 25,126 (YTD: -10.87%; 5YR: 4.2%)    
MSCI Emerging Markets down -27.26 (-2.62%) at 1,012 (YTD: -9.20%; 5YR: 5.5%)    
    
Selected Government Bond Yields    
US 2 Year down -0.22 at 0.29 (began the year at 1.57; 5 years ago it was 0.69)    
US 10 Year down -0.43 at 0.33 (began the year at 1.92; 5 years ago it was 2.19)    
UK 10 Year down -0.10 at 0.24 (began the year at 0.82; 5 years ago it was 1.94)    
Germany 10 Year down -0.14 at -0.85 (began the year at -0.19; 5 years ago it was 0.31)
France 10 Year up +0.00 at -0.35 (began the year at 0.12; 5 years ago it was 0.60)    
Italy 10 Year up +0.24 at 1.31 (began the year at 1.41; 5 years ago it was 1.28)    
Japan 10 Year down -0.04 at -0.18 (began the year at -0.02; 5 years ago it was 0.43)    
Barclays EM Basket up +0.02 at 3.80 (began the year at 4.27; 5 years ago it was 5.18)
    
Selected Currencies    
$ weakened -0.0161 versus € (-1.42%) at 1.1466 ($: YTD: -2.11%; 5YR: -5.6%)    
€ weakened -0.0005 versus £ (+0.04%) at 1.1507 (€: YTD: 2.66%; 5YR: 21.0%)    
$ weakened -0.0194 versus £ (-1.49%) at 1.3197 ($: YTD: 0.50%; 5YR: 12.7%)    
¥ strengthened +3.4500 versus $ (+3.38%) at 102.0300 (¥: YTD: -6.42%; 5YR: 18.9%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -11.28 (-24.93%) at 33.97 (YTD: -48.86%; 5YR: -41.6%)    
WTI Crude ($/bbl) down -4.62 (-10.07%) at 41.28 (YTD: -32.39%; 5YR: -16.8%)    
Gold ($/ozt) up +18.01 (+1.08%) at 1683.92 (YTD: 10.58%; 5YR: 44.2%)    
Copper ($/mt) down -67.00 (-1.18%) at 5607.00 (YTD: -9.18%; 5YR: -2.4%)    
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros