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18 December 2019

18/12/2019

Market Data and Morning Chat

Morning Chat 

Nothing to see here, or move on: After the last few days with equity markets rallying to recent – or indeed all-time – highs, yesterday saw markets settle slightly.  Continental European exchanges – worried over possibilities of a no-deal outcome – generally slipped though no one told the Italians the plan. In the US, equities rallied insignificantly. The slender changes were not driven by major data releases or new trade news. Yes, Italy saw a better trade balance (likely triggering the rally), but US housing starts were only in line and the good industrial production data came out too late for any significant effect.

This cabinet would work: Boris Johnson’s conservatives though are off to a quick – and controversial – start.  He did a mini-reshuffle in appointing his new “people’s” cabinet promoting Nicky Morgan to the Lords so she can remain Culture Secretary and filling various vacancies, such as Therese Coffey at Work & Pensions replacing departed Amber Rudd. Then to Parliament and swiftly amending the Brexit Bill to include a clause legally ruling out any transition period extension beyond year-end.  Although announced to end “dither & delay”, some see it increasing the chances of a no-deal Brexit causing sterling to retreat by nearly 1%. 

As are others: There was good news on UK employment for the new cabinet to consider. The employment level increased to 76.2%, nearly ½% higher than a year ago while the unemployment rate fell to 3.8%.  Three in four of those aged 16 to 64 are now working – that’s a since-records-began high and might have helped the Tories win the election.  Moreover, pay packets have been growing with regular pay up 3.5% in nominal terms – 1.7% after accounting for inflation!  The only slight disappointment was a further decline in vacancies, but some of that is likely due to Brexit uncertainty.

Equity market futures are still looking flat this morning with little news to stir them
Quiet steady climb in oil prices allows Royal Dutch (+4.2%) and BP (+2.3%) to lead UK stocks
Unilever (-7.2%) is unsurprisingly hung out to dry after guidance cuts to lag UK stocks
Netflix (+3.7%) streamed up on the release of detailed global subscriber growth data
Fedex (-6.8% aftermarket) leaves disappointing second quarter earnings on the market doorstep

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +2.33 (+0.17%) at 1,366 (YTD: 26.05%; 5YR: 58.5%)
MSCI AC World Equities (USD) down -3.25 (-0.03%) at 9,880 (YTD: 27.13%; 5YR: 55.2%)
Barclays Global Aggregate Bonds up +0.18 (+0.04%) at 510 (YTD: 6.52%; 5YR: 11.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +1.07 (+0.03%) at 3,193 (YTD: 27.35%; 5YR: 54.9%)    
NASDAQ up +9.13 (+0.10%) at 8,823 (YTD: 32.98%; 5YR: 85.8%)    
Euro STOXX 50 down -27.46 (-0.73%) at 3,745 (YTD: 24.78%; 5YR: 18.8%)    
FTSE 100 up +6.23 (+0.08%) at 7,525 (YTD: 11.85%; 5YR: 16.4%)    
CAC down -23.40 (-0.39%) at 5,968 (YTD: 26.16%; 5YR: 40.4%)    
DAX down -119.83 (-0.89%) at 13,288 (YTD: 25.84%; 5YR: 35.4%)    
Nikkei 225  down -131.69 (-0.55%) at 23,934 (YTD: 19.58%; 5YR: 39.1%)    
Hang Seng down -11.38 (-0.04%) at 27,832 (YTD: 7.69%; 5YR: 21.9%)    
MSCI Emerging Markets up +14.65 (+1.35%) at 1,103 (YTD: 14.17%; 5YR: 17.9%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.62 (began the year at 2.49; 5 years ago it was 0.63)    
US 10 Year down -0.01 at 1.87 (began the year at 2.68; 5 years ago it was 2.21)    
UK 10 Year down -0.06 at 0.76 (began the year at 1.28; 5 years ago it was 1.87)    
Germany 10 Year up +0.00 at -0.29 (began the year at 0.24; 5 years ago it was 0.62)    
France 10 Year up +0.00 at 0.00 (began the year at 0.70; 5 years ago it was 0.89)    
Italy 10 Year down 0.00 at 1.27 (began the year at 2.74; 5 years ago it was 1.96)    
Japan 10 Year down 0.00 at -0.02 (began the year at -0.01; 5 years ago it was 0.36)    
Barclays EM Basket up +0.02 at 4.24 (began the year at 6.22; 5 years ago it was 5.43)
    
Selected Currencies    
$ strengthened +0.0014 versus € (+0.13%) at 1.1138 ($: YTD: 2.74%; 5YR: 9.3%)    
€ weakened -0.0001 versus £ (+0.01%) at 1.1776 (€: YTD: -5.49%; 5YR: 8.3%)    
$ strengthened +0.0014 versus £ (+0.11%) at 1.3117 ($: YTD: -2.91%; 5YR: 16.2%)    
¥ strengthened +0.0200 versus $ (+0.02%) at 109.4400 (¥: YTD: -0.20%; 5YR: 8.8%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.14 (-0.21%) at 67.40 (YTD: 26.76%; 5YR: 13.8%)    
WTI Crude ($/bbl) up +0.73 (+1.21%) at 60.94 (YTD: 34.20%; 5YR: 7.9%)    
Gold ($/ozt) up +0.21 (+0.01%) at 1477.42 (YTD: 15.28%; 5YR: 23.6%)    
Copper ($/mt) up +1.00 (+0.02%) at 6200.00 (YTD: 3.94%; 5YR: -2.6%)    
    
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