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2 January 2020

02/12/2019

Market Data and Morning Chat

Morning Chat 

 

A vintage year: A year with Brexit, trade wars, impeachment, slowing growth, yet equities still uncorked excellent gains.  Using 2020 hindsight, the best bet was equities with a Greek appellation tasting a 55% return.  More mainstream, US equity markets driven by tech returned around 30% (best since 2013), while German and French markets generated over 25%, all of which helped global equities generate a 26% total return for the year.  Japanese returns were less full-bodied, but still a mellow 15%, and even Brexit-tainted UK equities generated double-digit gains – albeit Bordeaux-line – and the best annual gain for three years at 12%.

Still wine-ing about trade and Brexit: The big 2019 sentiment-drivers remain, at least for now, on the table.  After corkscrewing over the direction of Brexit, the path now appears more direct.  By month-end, assuming European leaders confirm the Withdrawal Agreement, the UK exits the EU and enters the transition period. By mid-summer we should have better claret-y over, hopefully, any year-end trade deal. Meanwhile, the US-China phase one deal looks tantalisingly close to fruition, with Donald Trump tweeting the agreement will be signed January 15, though beware, on past evidence there's many a slip 'twixt the cup and the lip.

And the other 2020 aperitifs? A new decade, a new year, yet also a new month, and as usual at the top of the month, there’s a decent array of data to taste.  Today, December Markit manufacturing PMI data for the big European economies (Germany, France, Italy, Spain and UK) and forecasts are not so sweet – indeed, the extra sec German and French forecasts anticipate notable declines, so it will help sentiment if they don’t.  Across the Atlantic, manufacturing PMI data may see some slight gains. Then tomorrow, French inflation, German & Spanish unemployment and US ISM confidence survey data. 

Bonds offered weaker annual profits with Gilts returning only single-digit total returns.
… and sterling gains also trimmed back international gains by 4% to 6% or so
Japan is closed today, but China’s off to a good start even though their PMI missed expectations
… the gains being driven more by those phase one trade deal expectations
Singapore flat as Q4 GDP growth – best for 3 quarters – still means decade-low annual growth

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +0.00 (+0.00%) at 1,375 (YTD: 0.00%; 5YR: 58.4%)
MSCI AC World Equities (USD) up +0.03 (+0.00%) at 9,979 (YTD: 0.00%; 5YR: 56.4%)
Barclays Global Aggregate Bonds up +0.75 (+0.15%) at 512 (YTD: 0.00%; 5YR: 12.1%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +9.49 (+0.29%) at 3,231 (YTD: 0.00%; 5YR: 56.9%)    
NASDAQ up +26.61 (+0.30%) at 8,973 (YTD: 0.00%; 5YR: 89.5%)    
Euro STOXX 50 down -3.32 (-0.09%) at 3,745 (YTD: 0.00%; 5YR: 19.0%)    
FTSE 100 down -44.61 (-0.59%) at 7,542 (YTD: 0.00%; 5YR: 14.9%)    
CAC down -4.16 (-0.07%) at 5,978 (YTD: 0.00%; 5YR: 39.9%)    
DAX down -88.10 (-0.66%) at 13,249 (YTD: 0.00%; 5YR: 35.1%)    
Nikkei 225  down -181.10 (-0.76%) at 23,657 (YTD: 0.00%; 5YR: 35.6%)    
Hang Seng up +330.78 (+1.17%) at 28,521 (YTD: 1.17%; 5YR: 20.8%)    
MSCI Emerging Markets down -0.02 (0.00%) at 1,115 (YTD: 0.00%; 5YR: 16.6%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.57 (began the year at 1.57; 5 years ago it was 0.66)    
US 10 Year up +0.00 at 1.92 (began the year at 1.92; 5 years ago it was 2.11)    
UK 10 Year unchanged at 0.82 (began the year at 0.82; 5 years ago it was 1.72)    
Germany 10 Year down -0.06 at -0.25 (began the year at -0.19; 5 years ago it was 0.50)
France 10 Year down -0.06 at 0.05 (began the year at 0.12; 5 years ago it was 0.78)    
Italy 10 Year down -0.10 at 1.31 (began the year at 1.41; 5 years ago it was 1.74)    
Japan 10 Year down -0.02 at -0.03 (began the year at -0.02; 5 years ago it was 0.32)    
Barclays EM Basket down -0.01 at 4.27 (began the year at 6.22; 5 years ago it was 5.40)
    
Selected Currencies    
$ strengthened +0.0007 versus € (+0.06%) at 1.1207 ($: YTD: 0.20%; 5YR: 6.7%)    
€ strengthened +0.0032 versus £ (-0.27%) at 1.1789 (€: YTD: 0.20%; 5YR: 8.5%)    
$ strengthened +0.0042 versus £ (+0.32%) at 1.3215 ($: YTD: 0.36%; 5YR: 14.0%)    
¥ weakened -0.1400 versus $ (-0.13%) at 108.7900 (¥: YTD: 0.19%; 5YR: 10.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.35 (+0.53%) at 66.66 (YTD: 0.36%; 5YR: 19.7%)    
WTI Crude ($/bbl) down -0.62 (-1.01%) at 61.06 (YTD: 34.46%; 5YR: 14.6%)    
Gold ($/ozt) up +2.63 (+0.17%) at 1520.18 (YTD: -0.17%; 5YR: 28.0%)    
Copper ($/mt) down -45.00 (-0.72%) at 6174.00 (YTD: 3.50%; 5YR: -2.0%)    
    
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