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4 December 2019

04/12/2019

Market Data and Morning Chat

Morning Chat 

Suffering turbulence from the air: Donald Trump flew into the UK yesterday, but while he was on Air Force One he as busy on twitter. Steel tariffs on Argentina & Brazil – the Argentine Merval fell 2.1% while the iBovespa hovered at flat thanks to a year’s-best +0.6% quarterly GDP growth level. Then Trump posited 100% tariffs on $2.4billion of French goods like cheese, wine and luxury products in response to Macron’s US-focussed digital tax. High-end brand companies Hermes (-2.5%), Kering (-1.9%), LVMH (-1.5%), Christian Dior (-1.5%) and wine bottle maker Verallia (-1.9%) all hit an air pocket on the possibility.

Landing with a Trump: Trump’s comments continued after he landed, touting Boris for Prime Minister, that he wasn’t interested in the NHS in any trade deal, and that he might want to hold off on any US-China trade deal until after the November 2020 election – assuming he’ll win. He might be trying to ratchet up pressure on China since they are pushing for a full roll-back on the tariffs within the phase one deal, but he did rattle investors.  The US slipped as much as 1%, the UK 1.3% and France (the specific target of more of Trump’s remarks) by 0.6%.

…and China in the baggage: Last year as concern over the US-China trade war intensified, it was companies – led by the likes of Texas Instruments – with significant sales in China that investors shied away from most. There was a similarity of names that saw weakness yesterday.  Chip-makers like Texas Instruments (-0.9%) Micron Technologies (-2.5%) – with over 50% of sales in China – and Intel (-2.8%) were obvious names to decline. Similarly, Caterpillar (-2.0%) and Apple (-1.7%) – also with large Chinese exposure – were also weak. Yet, maybe surprisingly, the energy and financial sectors were weakest on an assumption of continued slower growth.

Despite the tweets and remarks, European futures are up, but UK, US and Asian futures down
US House of Representatives seem determined to foil a deal passing Uighur support bill
… that would penalise Chinese officials over human rights violations against the Uighur minority
We’re only learning the ABC’s of it, but Larry Page is to step down as CEO of Alphabet (Google)
Analysing Salesforce (-1.0%), sales at record levels, but record a loss with Tableau purchase 
Kamala Harris drops out of the running for the Democratic candidate for President

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -8.53 (-0.64%) at 1,321 (YTD: 21.92%; 5YR: 50.9%)
MSCI AC World Equities (USD) down -55.98 (-0.58%) at 9,563 (YTD: 23.05%; 5YR: 47.7%)
Barclays Global Aggregate Bonds up +2.66 (+0.52%) at 510 (YTD: 6.58%; 5YR: 11.5%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -20.67 (-0.66%) at 3,093 (YTD: 23.39%; 5YR: 49.3%)    
NASDAQ down -47.34 (-0.55%) at 8,521 (YTD: 28.41%; 5YR: 78.7%)    
Euro STOXX 50 down -15.67 (-0.43%) at 3,611 (YTD: 20.31%; 5YR: 13.2%)    
FTSE 100 down -127.18 (-1.75%) at 7,159 (YTD: 6.40%; 5YR: 7.2%)    
CAC down -59.52 (-1.03%) at 5,727 (YTD: 21.07%; 5YR: 32.5%)    
DAX up +24.61 (+0.19%) at 12,989 (YTD: 23.02%; 5YR: 31.9%)    
Nikkei 225  down -244.58 (-1.05%) at 23,135 (YTD: 15.59%; 5YR: 29.3%)    
Hang Seng down -328.16 (-1.24%) at 26,063 (YTD: 0.84%; 5YR: 9.4%)    
MSCI Emerging Markets down -2.84 (-0.27%) at 1,037 (YTD: 7.41%; 5YR: 5.1%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.53 (began the year at 2.49; 5 years ago it was 0.54)    
US 10 Year down -0.01 at 1.70 (began the year at 2.68; 5 years ago it was 2.23)    
UK 10 Year down -0.01 at 0.66 (began the year at 1.28; 5 years ago it was 1.99)    
Germany 10 Year down -0.01 at -0.36 (began the year at 0.24; 5 years ago it was 0.77)    
France 10 Year down -0.01 at -0.06 (began the year at 0.70; 5 years ago it was 1.04)    
Italy 10 Year down -0.01 at 1.28 (began the year at 2.74; 5 years ago it was 2.03)    
Japan 10 Year down -0.02 at -0.05 (began the year at -0.01; 5 years ago it was 0.43)    
Barclays EM Basket up +4.24 at 4.24 (began the year at 6.22; 5 years ago it was 5.16)
    
Selected Currencies    
$ strengthened +0.0009 versus € (+0.08%) at 1.1079 ($: YTD: 3.26%; 5YR: 10.5%)    
€ weakened -0.0001 versus £ (+0.01%) at 1.1732 (€: YTD: -5.13%; 5YR: 8.0%)    
$ strengthened +0.0011 versus £ (+0.08%) at 1.2997 ($: YTD: -1.97%; 5YR: 17.1%)    
¥ strengthened +0.0200 versus $ (+0.02%) at 108.5100 (¥: YTD: -1.06%; 5YR: 10.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.11 (+0.18%) at 61.05 (YTD: 14.82%; 5YR: -11.5%)    
WTI Crude ($/bbl) up +0.14 (+0.25%) at 56.10 (YTD: 23.54%; 5YR: -16.7%)    
Gold ($/ozt) up +5.38 (+0.36%) at 1483.01 (YTD: 15.64%; 5YR: 23.0%)    
Copper ($/mt) down -68.00 (-1.16%) at 5815.00 (YTD: -2.51%; 5YR: -8.9%)    
    
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