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10 December 2019

10/12/2019

Market Data and Morning Chat

Morning Chat 

Reminds me of Wile E. Coyote: Stock markets don’t like to wait.  They feed on news and when anticipating something significant, it’s a bit like the coyote chasing the Road Runner. At some point, while in pursuit, he runs off solid ground, hangs in mid-air then drops (though still fights on).  Equity markets slipped yesterday too – mind you nothing like dropping off a cliff.  Investors are just waiting on Wednesday’s Fed rate decision, Thursday’s UK election & Friday’s results and US-China trade news & December 15 tariff deadline. Since markets are hanging, they slipped a bit waiting for solid ground.

The Terminator only needed the clothes, the boots and the motorcycle: Tullow oil lost their CEO, their dividend and their oil production – well at least a third of it.  It’s not terminal, but it’s not good and shares fell 71.8% yesterday.  Dorothy Thompson, the new interim chair, stated there were “material errors … in projecting forward production”. As a result CEO Paul McDade and Exploration head Angus McCoss have left and Tullow’s dividend has been suspended. The errors appear to stem from the quality of the oil found meaning higher capital expenditures and hence lower cash flow after such costs.

But there was some sunshine: With markets down and Tullow’s shocking news, you would be forgiven for thinking yesterday had no saving graces. Yet markets are only waiting for big news, and Tullow’s story was very company-specific.  In the meantime copper prices were up as Chinese imports of the metal rose to a more than 12-month high; that implies improvements in China’s economy. More, there’s been positive chatter of an imminent agreement on the US-Canada-Mexico trade deal - finally (yeah, it’s still lingering – Boris take note). Finally, the strong German exports hint at an economic recovery or pick-up there too.

French industrial production rise 0.4% versus a forecast 0.2% which should help sentiment today
… though equity futures remain mixed at the moment with UK & US up, Europe down
Tesco (+4.7%) rises as they consider moving their £7billion Asian assets to the sale aisle
Democrats expected to announce impeachment articles today at 2pm GMT news conference
US-Canada-Mexico trade deal looks closer after unions approve changes

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -2.44 (-0.18%) at 1,337 (YTD: 23.44%; 5YR: 56.1%)
MSCI AC World Equities (USD) down -15.60 (-0.16%) at 9,691 (YTD: 24.69%; 5YR: 53.0%)
Barclays Global Aggregate Bonds up +0.80 (+0.16%) at 509 (YTD: 6.31%; 5YR: 11.0%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -9.95 (-0.32%) at 3,136 (YTD: 25.10%; 5YR: 54.8%)    
NASDAQ down -34.70 (-0.40%) at 8,622 (YTD: 29.94%; 5YR: 84.1%)    
Euro STOXX 50 down -20.16 (-0.55%) at 3,672 (YTD: 22.35%; 5YR: 16.5%)    
FTSE 100 down -5.76 (-0.08%) at 7,234 (YTD: 7.52%; 5YR: 11.3%)    
CAC down -34.66 (-0.59%) at 5,837 (YTD: 23.39%; 5YR: 38.1%)    
DAX down -60.97 (-0.46%) at 13,106 (YTD: 24.12%; 5YR: 33.7%)    
Nikkei 225  down -20.51 (-0.09%) at 23,410 (YTD: 16.96%; 5YR: 34.4%)    
Hang Seng down -35.39 (-0.13%) at 26,459 (YTD: 2.37%; 5YR: 12.5%)    
MSCI Emerging Markets up +2.15 (+0.21%) at 1,051 (YTD: 8.84%; 5YR: 9.6%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.61 (began the year at 2.49; 5 years ago it was 0.57)    
US 10 Year down -0.01 at 1.81 (began the year at 2.68; 5 years ago it was 2.16)    
UK 10 Year down -0.01 at 0.76 (began the year at 1.28; 5 years ago it was 1.91)    
Germany 10 Year up +0.00 at -0.31 (began the year at 0.24; 5 years ago it was 0.68)    
France 10 Year up +0.00 at 0.01 (began the year at 0.70; 5 years ago it was 0.96)    
Italy 10 Year down 0.00 at 1.27 (began the year at 2.74; 5 years ago it was 2.06)    
Japan 10 Year down -0.01 at -0.02 (began the year at -0.01; 5 years ago it was 0.40)    
Barclays EM Basket down -0.02 at 4.22 (began the year at 6.22; 5 years ago it was 5.30)
    
Selected Currencies    
$ weakened -0.0015 versus € (-0.14%) at 1.1072 ($: YTD: 3.32%; 5YR: 10.9%)    
€ strengthened +0.0007 versus £ (-0.06%) at 1.1886 (€: YTD: -6.36%; 5YR: 6.3%)    
$ weakened -0.0010 versus £ (-0.08%) at 1.3158 ($: YTD: -3.23%; 5YR: 16.2%)    
¥ strengthened +0.0600 versus $ (+0.06%) at 108.6100 (¥: YTD: -0.97%; 5YR: 9.1%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.09 (+0.14%) at 65.51 (YTD: 23.21%; 5YR: 2.8%)    
WTI Crude ($/bbl) down -0.18 (-0.30%) at 59.02 (YTD: 29.97%; 5YR: -7.5%)    
Gold ($/ozt) up +1.35 (+0.09%) at 1462.97 (YTD: 14.08%; 5YR: 19.3%)    
Copper ($/mt) up +85.00 (+1.42%) at 6075.00 (YTD: 1.84%; 5YR: -6.3%)    
    
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