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3 December 2019

03/12/2019

Market Data and Morning Chat

Morning Chat 

Initially Caixin in on the good numbers: Monday was Purchasing Manager Index or PMI day, with Markit and others releasing a broad swathe of survey results. Indonesia kicked off with improving numbers to set the initial tone of the day.  China’s Caixin manufacturing continued to add to the optimism.  The November PMI was 51.8, higher than both the 51.4 forecast and 51.7 scored last month.  Roll in India’s better-than-expected data and the safe-haven Yen lost ground to the riskier Australian dollar. China’s Shanghai Composite also rallied, but later news eroded the gains to leave the index only modestly up 0.1%. 
 
Testing investors’ metal: According to Factbase, US President Donald Trump departed Andrews air force base in Washington en-route to London at 10:05am.  Maybe the inflight movies were not to his liking, but by 10:59am he was busy on twitter.  First came a restoration of tariffs against Brazilian and Argentinian steel and aluminum (his spelling for English purists).  Next a needling of the Federal Reserve to lower rates. Frustratingly – especially considering the broadly better-than-expected continental manufacturing PMIs – his tweets turned off the optimistic tone the day started with and helped drive European equity markets down 1 to 2¼% by the close.

Markit didn’t make it better: While European manufacturing PMIs were 0.1 to 0.3 above consensus and 1 to 2 points higher than Ocober … well, except the UK’s, and the US Markit manufacturing beat forecasts by 0.4, the ISM release disappointed. ISM’s manufacturing PMI missed the 49.2 expected and at 48.1 was lower than last month, the fourth time in a row the ISM data point was lower month-on-month.  Moreover, ISM manufacturing employment and new orders were also down on the month, and prices – while higher – missed consensus.  All very damaging to equity sentiment sending US equities down over 1%.

Equity market futures up marginally today in partial recovery after yesterday’s declines
Trump also considering 100% tariffs on French goods over tech tariffs – more champagne for us
Truly negative news, two smaller German lenders start charging savers on all new Euro accounts
The blackest of Black Fridays as US online sales hit a record level – UK sales also up 0.9%

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -9.37 (-0.70%) at 1,329 (YTD: 22.70%; 5YR: 51.5%)
MSCI AC World Equities (USD) down -66.49 (-0.69%) at 9,619 (YTD: 23.77%; 5YR: 48.3%)
Barclays Global Aggregate Bonds down -0.94 (-0.18%) at 508 (YTD: 6.02%; 5YR: 11.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -27.11 (-0.86%) at 3,114 (YTD: 24.21%; 5YR: 50.1%)    
NASDAQ down -97.48 (-1.12%) at 8,568 (YTD: 29.13%; 5YR: 79.5%)    
Euro STOXX 50 down -76.92 (-2.08%) at 3,627 (YTD: 20.83%; 5YR: 11.7%)    
FTSE 100 down -60.59 (-0.82%) at 7,286 (YTD: 8.29%; 5YR: 8.5%)    
CAC down -118.43 (-2.01%) at 5,787 (YTD: 22.32%; 5YR: 31.8%)    
DAX down -271.70 (-2.05%) at 12,965 (YTD: 22.78%; 5YR: 30.0%)    
Nikkei 225  down -149.69 (-0.64%) at 23,380 (YTD: 16.81%; 5YR: 31.9%)    
Hang Seng down -39.91 (-0.15%) at 26,405 (YTD: 2.16%; 5YR: 12.7%)    
MSCI Emerging Markets up +0.17 (+0.02%) at 1,040 (YTD: 7.71%; 5YR: 5.5%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.61 (began the year at 2.49; 5 years ago it was 0.56)    
US 10 Year up +0.01 at 1.83 (began the year at 2.68; 5 years ago it was 2.28)    
UK 10 Year up +0.04 at 0.74 (began the year at 1.28; 5 years ago it was 2.01)    
Germany 10 Year up +0.01 at -0.27 (began the year at 0.24; 5 years ago it was 0.75)    
France 10 Year up +0.01 at 0.03 (began the year at 0.70; 5 years ago it was 1.02)    
Italy 10 Year up +0.01 at 1.36 (began the year at 2.74; 5 years ago it was 1.98)    
Japan 10 Year up +0.03 at -0.03 (began the year at -0.01; 5 years ago it was 0.43)    
Barclays EM Basket down -5.52 at 0.00 (began the year at 6.22; 5 years ago it was 5.15)
    
Selected Currencies    
$ weakened -0.0002 versus € (-0.02%) at 1.1077 ($: YTD: 3.27%; 5YR: 10.0%)    
€ weakened -0.0023 versus £ (+0.20%) at 1.1701 (€: YTD: -4.88%; 5YR: 9.1%)    
$ weakened -0.0027 versus £ (-0.21%) at 1.2961 ($: YTD: -1.69%; 5YR: 17.5%)    
¥ weakened -0.0400 versus $ (-0.04%) at 109.0800 (¥: YTD: -0.53%; 5YR: 9.8%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.23 (+0.38%) at 61.00 (YTD: 14.73%; 5YR: -12.5%)    
WTI Crude ($/bbl) up +0.79 (+1.43%) at 55.96 (YTD: 23.23%; 5YR: -16.3%)    
Gold ($/ozt) up +0.53 (+0.04%) at 1462.98 (YTD: 14.08%; 5YR: 21.0%)    
Copper ($/mt) up +19.00 (+0.32%) at 5883.00 (YTD: -1.37%; 5YR: -8.3%)    
    
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