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20 January 2020

20/01/2020

Market Data and Morning Chat

Morning Chat

Signed, sealed, delivered: Global equities have been buffeted for months about the will-they-won’t-they negotiations over the US-China trade deal.  Last week, the phase one deal was closed. The 86-page agreement was a bit lightweight so there’s still a need for some clarity, but what was produced was not a disappointment. Equity markets, with few exceptions – Shanghai, Austria and Jamaica among them – saw gains of generally 1 to 2½% on the week with numerous markets hitting significant or even all-time highs. It also helped that EU Trade Commissioner Phil Hogan was reasonably optimistic over tariff negotiations between the EU and US. 

Higher ground? So the question is can gains continue? Equity valuations are higher than their long run averages on a price-earnings basis and some economic data last week was weaker than forecast (although Chinese and German GDP numbers were as hoped). This week there’s little economic data – some industrial production and flash manufacturing purchasing manager indices numbers – so the onus fall to earnings data. Last week, the big US banks with significant bond trading operations posted strong results while legal costs hurt others.  This week it’s the turn of tech names including Texas Instruments, Apple, Netflix and ServiceNow amongst others.

Sir Duke: The UK media’s been obsessed by the Prince Harry and Meghan situation. Apparently the resolution is the loss of their HRH status and a more private life with the couple to spend most of their time in Canada; and why not. Canadian house prices are not increasing as rapidly as in the UK – helping their financial position. There is a bit more strength in the manufacturing sector and wages are growing faster – important given the Sussex’s need for financial independence – although, worryingly, unemployment’s higher and of course there’s more snow – Newfoundland was just hit with 2½feet in a day!

Market futures point to a do nothing day with index levels little changed
Expect Trump’s impeachment trial, starting tomorrow at 1pm Eastern, to dominate US news flow
Schlumberger (-0.3%) served up better-than-forecast results, but US revenues down
Qualcomm (+4.5%) rallied after they chipped in with an improved 2020 earnings guidance
Palladium drives 3.2% higher to a record $2,400 an ounce as auto demand remains robust
Chocolate lovers panic – coca prices are now up by a third since August to a 20-month high

Market Data

Selected Global Aggregates (Total returns, unhedged) 
MSCI AC World Equities (Local) up +6.89 (+0.49%) at 1,416 (YTD: 2.95%; 5YR: 64.4%)
MSCI AC World Equities (USD) up +39.69 (+0.39%) at 10,227 (YTD: 2.48%; 5YR: 62.5%)
Barclays Global Aggregate Bonds down -0.75 (-0.15%) at 511 (YTD: -0.15%; 5YR: 11.7%)
 
Selected Equity Indices (Capital returns) 
S&P 500 up +12.81 (+0.39%) at 3,330 (YTD: 3.06%; 5YR: 64.6%) 
NASDAQ up +31.81 (+0.34%) at 9,389 (YTD: 4.64%; 5YR: 101.7%) 
Euro STOXX 50 up +34.12 (+0.90%) at 3,808 (YTD: 1.69%; 5YR: 17.4%) 
FTSE 100 up +64.75 (+0.85%) at 7,675 (YTD: 1.75%; 5YR: 15.9%) 
CAC up +61.69 (+1.02%) at 6,101 (YTD: 2.05%; 5YR: 37.2%) 
DAX up +96.70 (+0.72%) at 13,526 (YTD: 2.09%; 5YR: 31.9%) 
Nikkei 225  up +42.25 (+0.18%) at 24,084 (YTD: 1.80%; 5YR: 38.7%) 
Hang Seng down -178.57 (-0.61%) at 28,878 (YTD: 2.44%; 5YR: 20.6%) 
MSCI Emerging Markets up +6.21 (+0.54%) at 1,147 (YTD: 2.89%; 5YR: 19.8%) 
 
Selected Government Bond Yields 
US 2 Year unchanged at 1.56 (began the year at 1.57; 5 years ago it was 0.49) 
US 10 Year unchanged at 1.82 (began the year at 1.92; 5 years ago it was 1.79) 
UK 10 Year down -0.01 at 0.63 (began the year at 0.82; 5 years ago it was 1.53) 
Germany 10 Year up +0.00 at -0.21 (began the year at -0.19; 5 years ago it was 0.45) 
France 10 Year up +0.00 at 0.05 (began the year at 0.12; 5 years ago it was 0.65) 
Italy 10 Year up +0.00 at 1.38 (began the year at 1.41; 5 years ago it was 1.67) 
Japan 10 Year up +0.01 at 0.00 (began the year at -0.02; 5 years ago it was 0.21) 
Barclays EM Basket down 0.00 at 4.17 (began the year at 4.27; 5 years ago it was 5.08)
 
Selected Currencies 
$ weakened -0.0008 versus € (-0.07%) at 1.1099 ($: YTD: 1.16%; 5YR: 3.9%) 
€ strengthened +0.0043 versus £ (-0.37%) at 1.1699 (€: YTD: 0.97%; 5YR: 12.2%) 
$ strengthened +0.0039 versus £ (+0.30%) at 1.2985 ($: YTD: 2.10%; 5YR: 14.3%) 
¥ weakened -0.0400 versus $ (-0.04%) at 110.1800 (¥: YTD: 1.45%; 5YR: 7.7%) 
 
Selected Commodities 
Brent Crude ($/bbl) down -0.13 (-0.20%) at 65.05 (YTD: -2.06%; 5YR: 43.1%) 
WTI Crude ($/bbl) up +0.02 (+0.03%) at 58.54 (YTD: -4.13%; 5YR: 20.2%) 
Gold ($/ozt) up +1.42 (+0.09%) at 1561.23 (YTD: 2.52%; 5YR: 20.7%) 
Copper ($/mt) down -4.50 (-0.07%) at 6273.00 (YTD: 1.60%; 5YR: 9.8%) 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros