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20 December 2019

20/12/2019

Market Data and Morning Chat

Morning Chat

Don’t get technical with me. What mission? What are you talking about? Parliament convened for a Queen’s speech yesterday that Boris Johnson hailed as the most radical in a generation. Thirty bills were revealed, seven of which cover Brexit, the UK departure on January 31 and beyond. There are bills to tighten criminal law, give more funding for the NHS and schools, help the environment, repeal the fixed-term Parliaments bill and deal with fake news and foreign interference in UK politics – enough to keep civil servants very busy. Certainly, the infrastructure and science research investment could prove interesting for investors.

If you strike me down I shall become more powerful than you can possibly imagine. Democrats passed the two articles of impeachment. US President Donald Trump becomes only the third impeached US President – though neither predecessor, Andrew Johnson or Bill Clinton, were ousted (Johnson was close). Given House Republicans voted unanimously for Trump, financial markets are factoring in – probably safely – that Senate majority Republicans won’t vote to remove him from office so you’ve got to wonder if the process will backfire on the Democrats as with the Republicans and Clinton. Already Trump’s approval rating is rallying and Impeachment support flagging.

Many of the truths that we cling to depend on our point of view: A few years ago most thought it impossible to force government headline rates into negative territory to boost stimulus. They did, and with them large segments of government bonds as well – indeed, this summer the entire German yield curve was negative – significantly damaging banking sector profits.  However, the beginning, possibly, of the end of negative rates came about yesterday as the Swedish Riksbank, as anticipated, hiked their repo rate back to zero. Now only the ECB, the Danish, Swiss and Japanese central banks have negative rates.

The main saga of Star Wars comes to a close with yesterday’s opening of Rise of Skywalker
Equity futures taking on a shade of Christmas red today showing a marginal slip
Boris Johnson’s Brexit deal due for first reading today with workers’ rights clauses removed
Andrew Bailey, head of the FCA, is to become the new Governor of the Bank of England
The US House of Representatives also voted in support of the new USMCA trade deal
Glencore (+2.3%) rallied to lead UK main stocks on analyst’s decision they dig the company 
Conagra (+15.9%) hit the top of gains as Pinnacle foods helped drive sales above expectations 
Nike (-1.7%) delivered news of an earnings beat but US sales were disappointing

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +3.52 (+0.26%) at 1,369 (YTD: 26.38%; 5YR: 57.8%)
MSCI AC World Equities (USD) up +31.68 (+0.32%) at 9,898 (YTD: 27.36%; 5YR: 54.5%)
Barclays Global Aggregate Bonds down -0.01 (0.00%) at 509 (YTD: 6.27%; 5YR: 11.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +14.23 (+0.45%) at 3,205 (YTD: 27.86%; 5YR: 54.8%)    
NASDAQ up +59.48 (+0.67%) at 8,887 (YTD: 33.94%; 5YR: 86.5%)    
Euro STOXX 50 up +0.17 (+0.00%) at 3,739 (YTD: 24.58%; 5YR: 19.0%)    
FTSE 100 up +33.07 (+0.44%) at 7,574 (YTD: 12.57%; 5YR: 15.7%)    
CAC up +12.68 (+0.21%) at 5,972 (YTD: 26.25%; 5YR: 40.8%)    
DAX down -10.20 (-0.08%) at 13,212 (YTD: 25.13%; 5YR: 35.0%)    
Nikkei 225  down -48.22 (-0.20%) at 23,817 (YTD: 19.00%; 5YR: 35.2%)    
Hang Seng up +8.51 (+0.03%) at 27,809 (YTD: 7.60%; 5YR: 20.3%)    
MSCI Emerging Markets down -2.56 (-0.23%) at 1,107 (YTD: 14.58%; 5YR: 17.2%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.63 (began the year at 2.49; 5 years ago it was 0.64)    
US 10 Year up +0.01 at 1.93 (began the year at 2.68; 5 years ago it was 2.16)    
UK 10 Year up +0.03 at 0.80 (began the year at 1.28; 5 years ago it was 1.85)    
Germany 10 Year up +0.00 at -0.23 (began the year at 0.24; 5 years ago it was 0.59)    
France 10 Year up +0.00 at 0.06 (began the year at 0.70; 5 years ago it was 0.89)    
Italy 10 Year down 0.00 at 1.38 (began the year at 2.74; 5 years ago it was 1.95)    
Japan 10 Year up +0.01 at 0.01 (began the year at -0.01; 5 years ago it was 0.35)    
Barclays EM Basket up +0.02 at 4.30 (began the year at 6.22; 5 years ago it was 5.44)
    
Selected Currencies    
$ strengthened +0.0008 versus € (+0.07%) at 1.1117 ($: YTD: 2.93%; 5YR: 9.2%)    
€ strengthened +0.0003 versus £ (-0.03%) at 1.1718 (€: YTD: -5.02%; 5YR: 8.9%)    
$ strengthened +0.0014 versus £ (+0.11%) at 1.3025 ($: YTD: -2.19%; 5YR: 16.6%)    
¥ weakened -0.0600 versus $ (-0.05%) at 109.2700 (¥: YTD: -0.36%; 5YR: 9.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.05 (-0.07%) at 67.68 (YTD: 27.29%; 5YR: 10.5%)    
WTI Crude ($/bbl) up +0.29 (+0.48%) at 61.22 (YTD: 34.82%; 5YR: 8.3%)    
Gold ($/ozt) down -0.90 (-0.06%) at 1479.02 (YTD: 15.41%; 5YR: 23.6%)    
Copper ($/mt) up +40.50 (+0.66%) at 6215.00 (YTD: 4.19%; 5YR: -2.9%)    
    
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