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12 December 2019

12/12/2019

Market Data and Morning Chat

Morning Chat

 

Today’s the day the market’s been waiting for: After a do-nothing day, the tally for UK equites this year is a whopping 9.0% gain, feeble compared to American, German and French returns.  Their indices are up around 25%. Asian indices may not have been as strong but they too have outperformed the UK in their local currency terms. Yes, the pound has enjoyed some strength reducing those international 2019 gains, but generally not to a comparable level. Our economy’s not been so bad, rather it’s Brexit indecision acting as a drag and depending on today’s election result, the drag could moderate.

No cutting remarks: Unsurprisingly, US Federal Reserve Chairman Jerome Powell announced the Federal Open Market Committee (FOMC) had decided not to cut the fed funds target rate from the present 1.50-1.75%. His remarks added that “the current stance of monetary policy is appropriate for a sustained expansion of economic activity”, which appears to call time on more reducing rates.  Moreover, the Fed’s dot plot of FOMC members’ forward-looking expectations implies rates will remain unchanged next year before seeing hikes in both 2021 and 2022 with an overall marginally higher pace of hikes now assumed compared to the views in September.

Oil’s not so pumped: The US Energy Information Administration’s (EIA) weekly crude inventories level has echoed the 2015 trend.  This week analysts expected a 2.8million barrel decline in inventories, but EIA numbers revealed a surprise build of 822,000 barrels instead and  it couples with the American Petroleum Institute reporting a 1.4million barrel inventory build. Moreover, the gasoline and distillates inventories also rose. All very disheartening for oil demand prompting Brent and West Texas prices to fall.  Yet after weeks of inventory draws – and some heavy winter snowfall bottling supply – the build may be a one-off.  Let’s see how trends evolve.

The first exit polls for today’s election should be coming out by 10pm then around 11pm …
… Sunderland and Newcastle-upon-Tyne will run their usual race to be the first to declare.
…hmm, and it’s Friday the 13th tomorrow – hopefully no horror show!
Markets appear pleased by the FOMC and calm on the election as futures marginally up
Other than the election, Christine Lagarde will attend her debut conference as ECB head
Nestle (+0.1%) to sell US Froneri business for $4billion as it goes cold on Haagan-Dazs
Well, well, well, domestically-listed Saudi Aramco (+10.0%) nears the $2trillion mark

 

Market Data

 

Selected Global Aggregates (Total returns, unhedged)   
MSCI AC World Equities (Local) up +3.57 (+0.27%) at 1,339 (YTD: 23.60%; 5YR: 58.5%)
MSCI AC World Equities (USD) up +22.72 (+0.23%) at 9,701 (YTD: 24.83%; 5YR: 55.3%)
Barclays Global Aggregate Bonds up +0.70 (+0.14%) at 510 (YTD: 6.51%; 5YR: 10.9%)

               

Selected Equity Indices (Capital returns)
S&P 500 up +9.11 (+0.29%) at 3,142 (YTD: 25.32%; 5YR: 56.9%)  
NASDAQ up +37.87 (+0.44%) at 8,654 (YTD: 30.42%; 5YR: 86.0%)
Euro STOXX 50 up +15.67 (+0.43%) at 3,687 (YTD: 22.86%; 5YR: 20.2%)   
FTSE 100 up +2.49 (+0.03%) at 7,216 (YTD: 7.25%; 5YR: 14.5%)    
CAC up +12.85 (+0.22%) at 5,861 (YTD: 23.89%; 5YR: 42.6%)        
DAX up +76.02 (+0.58%) at 13,147 (YTD: 24.51%; 5YR: 37.0%)      
Nikkei 225  up +32.95 (+0.14%) at 23,425 (YTD: 17.04%; 5YR: 34.8%)        
Hang Seng up +338.84 (+1.27%) at 26,984 (YTD: 4.41%; 5YR: 16.1%)         
MSCI Emerging Markets up +8.73 (+0.83%) at 1,058 (YTD: 9.57%; 5YR: 12.8%)      

               

Selected Government Bond Yields           

US 2 Year up +0.00 at 1.62 (began the year at 2.49; 5 years ago it was 0.54)
US 10 Year up +0.01 at 1.81 (began the year at 2.68; 5 years ago it was 2.08) 
UK 10 Year down -0.03 at 0.77 (began the year at 1.28; 5 years ago it was 1.80)   
Germany 10 Year up +0.00 at -0.32 (began the year at 0.24; 5 years ago it was 0.62)          
France 10 Year up +0.00 at -0.01 (began the year at 0.70; 5 years ago it was 0.90)              
Italy 10 Year up +0.01 at 1.22 (began the year at 2.74; 5 years ago it was 2.06)     
Japan 10 Year down -0.02 at -0.02 (began the year at -0.01; 5 years ago it was 0.39)          
Barclays EM Basket down 0.00 at 4.21 (began the year at 6.22; 5 years ago it was 5.31)

               

Selected Currencies
$ weakened -0.0047 versus € (-0.42%) at 1.1139 ($: YTD: 2.73%; 5YR: 10.6%)        
€ strengthened +0.0005 versus £ (-0.04%) at 1.1868 (€: YTD: -6.22%; 5YR: 6.3%) 
$ weakened -0.0048 versus £ (-0.36%) at 1.3220 ($: YTD: -3.72%; 5YR: 15.9%)      ¥ strengthened +0.0700 versus $ (+0.06%) at 108.6200 (¥: YTD: -0.96%; 5YR: 9.0%)           

               

Selected Commodities  

Brent Crude ($/bbl) up +0.13 (+0.20%) at 65.29 (YTD: 22.79%; 5YR: 6.9%)
WTI Crude ($/bbl) down -0.48 (-0.81%) at 58.76 (YTD: 29.40%; 5YR: -2.0%)
Gold ($/ozt) up +3.25 (+0.22%) at 1473.73 (YTD: 14.99%; 5YR: 20.4%)      
Copper ($/mt) up +56.00 (+0.92%) at 6156.00 (YTD: 3.20%; 5YR: -4.7%)  

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