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9 December 2019

09/12/2019

Market Data and Morning Chat

Morning Chat 

Good thing we didn’t have a four-day week. Equities disappointed last week while bonds only modest gains. Thankfully there was Friday. The week’s bond gains nearly doubled on Friday while equities halved their decline.  The week was plagued by oscillating sentiment over US-China trade talks and Donald Trump thumping tariffs on Argentinian & Brazilian steel (and considering 100% tariffs on French goods) . Friday partially recouped the losses thanks to robust US non-farm payrolls of 266,000 – 76,000 over the estimate. Yes, that’s well within the range of error and partially due to GM’s strike ending, but it sure helped sentiment.

As for this week: Non-farm payrolls, and data such as the unexpected fall in US unemployment to 3.5%, are often solid drivers of investor sentiment. Data releases in week two of any month tend to have a lesser impact. However, we do still get US inflation and retail trade – both can drive interest rate expectations and rate-cut expectations have contracted substantially already – alongside the upcoming Federal Open Market Committee meeting.  We also see UK and European industrial production numbers revealed as well the German economic sentiment survey – all good indicators as to the health of the UK and European economies.

Friday could be another telling day though: We’re into the final week of the UK election campaign and Friday will see the results.  As you would expect this past weekend saw a flurry of polls and they still give a Tory lead.  Looked at by pollster, of the 11 who polled in December (i.e. this past week) – and some are polls by the same pollster for different clients with quite varied results (Savanta had three with leads of 6%, 8% and 10% within days) – they show the Tory lead slipping by an average 0.4% on the week to 9% overall.

An unexpected contraction in Chinese exports unfortunately puts market futures in the red
… but they’re rising on stronger-than-expected German trade balance as exports rise 1.2% 
Japanese Q3 GDP revised higher to +0.4% in final review on better business investment levels
Returns are ok at packaging firm DS Smith (+5.2%) as it recoups some lost ground after results

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +10.91 (+0.82%) at 1,340 (YTD: 23.66%; 5YR: 54.5%)
MSCI AC World Equities (USD) up +75.64 (+0.79%) at 9,706 (YTD: 24.89%; 5YR: 51.2%)
Barclays Global Aggregate Bonds down -1.08 (-0.21%) at 508 (YTD: 6.15%; 5YR: 10.9%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +28.48 (+0.91%) at 3,146 (YTD: 25.49%; 5YR: 52.7%)    
NASDAQ up +85.83 (+1.00%) at 8,657 (YTD: 30.46%; 5YR: 81.6%)    
Euro STOXX 50 up +44.21 (+1.21%) at 3,692 (YTD: 23.02%; 5YR: 16.7%)    
FTSE 100 up +101.81 (+1.43%) at 7,240 (YTD: 7.60%; 5YR: 10.9%)    
CAC up +70.36 (+1.21%) at 5,872 (YTD: 24.12%; 5YR: 37.7%)    
DAX up +111.78 (+0.86%) at 13,167 (YTD: 24.70%; 5YR: 34.4%)    
Nikkei 225  up +76.30 (+0.33%) at 23,431 (YTD: 17.07%; 5YR: 31.5%)    
Hang Seng up +29.82 (+0.11%) at 26,528 (YTD: 2.64%; 5YR: 13.0%)    
MSCI Emerging Markets up +6.11 (+0.59%) at 1,049 (YTD: 8.61%; 5YR: 8.7%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.61 (began the year at 2.49; 5 years ago it was 0.61)    
US 10 Year down -0.01 at 1.83 (began the year at 2.68; 5 years ago it was 2.21)    
UK 10 Year down 0.00 at 0.77 (began the year at 1.28; 5 years ago it was 1.89)    
Germany 10 Year down -0.01 at -0.30 (began the year at 0.24; 5 years ago it was 0.69)    
France 10 Year down -0.01 at 0.02 (began the year at 0.70; 5 years ago it was 0.97)    
Italy 10 Year down -0.01 at 1.34 (began the year at 2.74; 5 years ago it was 2.03)    
Japan 10 Year unchanged at -0.01 (began the year at -0.01; 5 years ago it was 0.41)    
Barclays EM Basket down 0.00 at 4.23 (began the year at 6.22; 5 years ago it was 5.29)
    
Selected Currencies    
$ weakened -0.0009 versus € (-0.08%) at 1.1064 ($: YTD: 3.39%; 5YR: 10.7%)    
€ weakened -0.0024 versus £ (+0.20%) at 1.1904 (€: YTD: -6.50%; 5YR: 6.3%)    
$ weakened -0.0038 versus £ (-0.29%) at 1.3171 ($: YTD: -3.33%; 5YR: 16.0%)    
¥ strengthened +0.0400 versus $ (+0.04%) at 108.5800 (¥: YTD: -0.99%; 5YR: 9.9%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.12 (-0.18%) at 65.34 (YTD: 22.89%; 5YR: -0.9%)    
WTI Crude ($/bbl) up +0.77 (+1.32%) at 59.20 (YTD: 30.37%; 5YR: -10.1%)    
Gold ($/ozt) up +1.66 (+0.11%) at 1461.82 (YTD: 13.99%; 5YR: 18.8%)    
Copper ($/mt) up +102.00 (+1.73%) at 5990.00 (YTD: 0.42%; 5YR: -7.1%)    
    
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