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28 January 2020

28/01/2020

Market Data and Morning Chat

Morning Chat

Feeling under the weather: European equities were definitely laid low by the coronavirus yesterday with major indices down 2¼ to 2¾%. US equities followed suit, although by less, falling 1½% given US declines on Friday. The cause again can be laid against the Wuhan outbreak as early on Chinese-exposed travel names – Wynn Resorts (-8.1%), Royal Caribbean (-9.8%) and Las Vegas Sands (-6.8%) – led S&P shares lower. Although there are only 65 international cases of the coronavirus, reports over the length of the asymptomatic period has heightened concerns Chinese containment plans have come too late and the illness will intensify significantly. 

While economics were not chicken soup for the sentiment: The next few days sees GDP and durable goods data – that could help. There’s also earnings releases from Apple today & the likes of Novartis, Visa & Mastercard tomorrow – that too could help. However, apparently the German Ifo and US new home sales releases didn’t help.  Germany’s Ifo Business Climate survey for January slipped from 96.3 to 95.9 when expected to rise, reversing a three-month trend, ouch.  Meanwhile, for the third month in a row, US new home sales also declined, falling 0.4% when analysts expected to see a 1.5% improvement. 

The league gets relegated: The Italian 10-year bond yield dropped by over a third of a percent from 1.40% to 1.06% within days on the back of Italy’s Emilia-Romagna regional election result. Given their national polling strength and framing the election as a referendum on the government, expectations tilted towards Matteo Salvini and the Lega Nord overturning 75-years of left-wing control in the heartland of the 5-star party. However, Salvini only managed second place. Yet it wasn’t 5-star day either – they fell to only 5%. Left-wing, establishment Democratic Party won the day, rebuffing populists and Euro-sceptics to maintain their power. 

Equity market declines look to take a breath as most futures – bar Italy and Asia – turn positive 
… though BA parent IAG (-5.5%) hits turbulence over the coronavirus cloud (Easyjet down 4.9%)
On the eve of earnings, Alphabet (-2.4%) slips below $1trillion market valuation
DR Horton (+2.0%) results houses forecast-beating earnings and they raised the roof on guidance
F5 Networks’ (-2.3%) 50% jump in revenues not enough to offset let-down of their Q2 guidance

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -21.91 (-1.56%) at 1,381 (YTD: 0.39%; 5YR: 58.8%)
MSCI AC World Equities (USD) down -166.06 (-1.64%) at 9,977 (YTD: -0.02%; 5YR: 58.1%)
Barclays Global Aggregate Bonds up +1.72 (+0.33%) at 516 (YTD: 0.77%; 5YR: 13.1%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -51.84 (-1.57%) at 3,244 (YTD: 0.40%; 5YR: 62.0%)    
NASDAQ down -175.60 (-1.89%) at 9,139 (YTD: 1.86%; 5YR: 97.1%)    
Euro STOXX 50 down -101.32 (-2.68%) at 3,678 (YTD: -1.80%; 5YR: 9.5%)    
FTSE 100 down -173.93 (-2.29%) at 7,412 (YTD: -1.73%; 5YR: 8.6%)    
CAC down -161.24 (-2.68%) at 5,863 (YTD: -1.92%; 5YR: 27.2%)    
DAX down -371.91 (-2.74%) at 13,205 (YTD: -0.33%; 5YR: 23.3%)    
Nikkei 225  down -127.80 (-0.55%) at 23,216 (YTD: -1.86%; 5YR: 30.5%)    
Hang Seng up +40.52 (+0.15%) at 27,950 (YTD: -0.85%; 5YR: 12.7%)    
MSCI Emerging Markets down -16.41 (-1.47%) at 1,103 (YTD: -1.05%; 5YR: 12.0%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.43 (began the year at 1.57; 5 years ago it was 0.47)    
US 10 Year up +0.01 at 1.61 (began the year at 1.92; 5 years ago it was 1.72)    
UK 10 Year down -0.06 at 0.51 (began the year at 0.82; 5 years ago it was 1.46)    
Germany 10 Year up +0.00 at -0.39 (began the year at -0.19; 5 years ago it was 0.35)    
France 10 Year up +0.00 at -0.13 (began the year at 0.12; 5 years ago it was 0.57)    
Italy 10 Year down 0.00 at 1.03 (began the year at 1.41; 5 years ago it was 1.59)    
Japan 10 Year up +0.00 at -0.05 (began the year at -0.02; 5 years ago it was 0.29)    
Barclays EM Basket down -0.01 at 4.06 (began the year at 4.27; 5 years ago it was 4.90)
    
Selected Currencies    
$ unchanged 0.0000 versus € (0.00%) at 1.1015 ($: YTD: 1.91%; 5YR: 3.0%)    
€ strengthened +0.0026 versus £ (-0.22%) at 1.1829 (€: YTD: -0.14%; 5YR: 13.0%)    
$ strengthened +0.0028 versus £ (+0.21%) at 1.3030 ($: YTD: 1.76%; 5YR: 14.1%)    
¥ weakened -0.0600 versus $ (-0.06%) at 109.0700 (¥: YTD: 0.45%; 5YR: 8.0%)    
    
Selected Commodities    

Brent Crude ($/bbl) up +0.50 (+0.86%) at 58.71 (YTD: -11.61%; 5YR: 26.9%)    
WTI Crude ($/bbl) down -0.98 (-1.81%) at 53.14 (YTD: -12.97%; 5YR: 15.0%)    
Gold ($/ozt) down -1.63 (-0.10%) at 1578.62 (YTD: 3.66%; 5YR: 22.6%)    
Copper ($/mt) down -183.00 (-3.09%) at 5743.00 (YTD: -6.98%; 5YR: 5.9%)    
 

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros