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22 January 2020

22/01/2020

Market Data and Morning Chat

Morning Chat

Asian contagion: Hong Kong’s Hang Seng index closed down 2.81%, its biggest single-session tumble since early August, while Shanghai’s CSI300 slipped 1.7% and negative sentiment has infected European markets. Yet it’s not concern over trade deals or economics that’s bugging investors, rather growing alarm over the current coronavirus outbreak.  With around 300 confirmed cases and transmission proving easier than initially thought – more worrying considering the precautions taken – and the upcoming Friday’s week-long Lunar New Year break there are concerns the illness will no longer be contained.  (Note: only 10% of cases are problematic while 90% only get a mild illness)

And contaminates the United States: US equities suffered similar declines to European counterparts over the Asian coronavirus and compounded by the first recorded American case as an infected traveller landed in Seattle. Airlines and hotel stocks saw big declines – Delta fell 2½%, MGM 6.2%, Wynn 6.1% and Las Vegas Sands 5.4%. Boeing fell 3.4%, but because the 737Max isn’t flying rather than over planes that are. Yet there was good news too. IBM leapt 3.5% after finally posting earnings that impressed investors and beat analyst forecasts. Netflix shares streamed up 2.4% as their results beat both sales and profits estimates.

Double’s not nothing: UK rate cut odds topped out just over 70% on Friday over concern the economy needed monetary adrenalin. However, yesterday’s employment data started dissipating the rate cut fever and the odds eased by 10%.  The forecasts for the UK employment change for the three months to November averaged 110,000 – a healthy step up on last month’s 24,000 – yet the announced number was even more robust 208,000 – nearly double the estimate. Moreover, wages gains held up reasonably at 3.4% year-on-year and unemployment stayed at a 45-year low 3.8%. All good enough for a ½% rally in the pound. 

So, worried over the bad news – don’t be, equity futures point to a rebound today
… Germany’s feeling better too – they saw a big rebound in their economic expectations survey
Senate leader Mitch McConnell concedes extra time for opening arguments to Democrats…
… but keeps firm control on all other procedural rules in Trump impeachment trial
And then there were four; Jess Philips drops out of Labour race as Nandy gets GMB support 
EasyJet (+4.6%) throttles up its 2020 first half guidance after strong Q4 revenue gain
Oil services co Halliburton (-0.8%) found a $2.2billion hole in earnings on weaker US shale work

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -6.18 (-0.44%) at 1,410 (YTD: 2.50%; 5YR: 60.8%)
MSCI AC World Equities (USD) down -24.18 (-0.24%) at 10,201 (YTD: 2.22%; 5YR: 59.7%)
Barclays Global Aggregate Bonds up +1.64 (+0.32%) at 512 (YTD: 0.13%; 5YR: 12.7%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -8.83 (-0.27%) at 3,321 (YTD: 2.79%; 5YR: 61.0%)    
NASDAQ down -18.14 (-0.19%) at 9,371 (YTD: 4.44%; 5YR: 97.3%)    
Euro STOXX 50 down -9.91 (-0.26%) at 3,789 (YTD: 1.17%; 5YR: 14.0%)    
FTSE 100 down -40.74 (-0.53%) at 7,611 (YTD: 0.91%; 5YR: 12.0%)    
CAC down -32.55 (-0.54%) at 6,046 (YTD: 1.14%; 5YR: 32.8%)    
DAX up +6.93 (+0.05%) at 13,556 (YTD: 2.32%; 5YR: 29.9%)    
Nikkei 225  up +166.79 (+0.70%) at 24,031 (YTD: 1.58%; 5YR: 38.7%)    
Hang Seng up +392.46 (+1.40%) at 28,378 (YTD: 0.67%; 5YR: 15.7%)    
MSCI Emerging Markets down -18.83 (-1.64%) at 1,127 (YTD: 1.09%; 5YR: 14.6%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.54 (began the year at 1.57; 5 years ago it was 0.52)    
US 10 Year up +0.01 at 1.78 (began the year at 1.92; 5 years ago it was 1.86)    
UK 10 Year down -0.02 at 0.63 (began the year at 0.82; 5 years ago it was 1.52)    
Germany 10 Year up +0.01 at -0.24 (began the year at -0.19; 5 years ago it was 0.45)    
France 10 Year up +0.01 at 0.02 (began the year at 0.12; 5 years ago it was 0.62)    
Italy 10 Year up +0.07 at 1.44 (began the year at 1.41; 5 years ago it was 1.55)    
Japan 10 Year down -0.01 at -0.01 (began the year at -0.02; 5 years ago it was 0.31)    
Barclays EM Basket down -0.02 at 4.15 (began the year at 4.27; 5 years ago it was 5.06)
    
Selected Currencies    
$ strengthened +0.0007 versus € (+0.06%) at 1.1085 ($: YTD: 1.28%; 5YR: 2.6%)    
€ weakened -0.0017 versus £ (+0.14%) at 1.1779 (€: YTD: 0.29%; 5YR: 12.1%)    
$ weakened -0.0010 versus £ (-0.08%) at 1.3056 ($: YTD: 1.56%; 5YR: 13.1%)    
¥ weakened -0.0700 versus $ (-0.06%) at 109.9900 (¥: YTD: 1.28%; 5YR: 7.4%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.16 (-0.25%) at 63.76 (YTD: -4.00%; 5YR: 37.1%)    
WTI Crude ($/bbl) down -0.20 (-0.34%) at 58.34 (YTD: -4.45%; 5YR: 23.4%)    
Gold ($/ozt) down -2.43 (-0.16%) at 1554.69 (YTD: 2.09%; 5YR: 19.5%)    
Copper ($/mt) down -99.00 (-1.58%) at 6160.00 (YTD: -0.23%; 5YR: 6.7%)    

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros