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29 January 2020

29/01/2020

Market Data and Morning Chat

Morning Chat 

A virus with no name: Coronavirus is a viral type, Wuhan virus a locator, and 2019-nCoV a designator, but the virus at the root of the current outbreak does not yet have a memorable name like two other coronaviruses SARS or MERS. Give it time.  The markets however have taken a breather from their declines over the epidemic, regaining ¾ to 1½% (Italy, with the election kicker, is up even more over 2½%).  However, the gains were not led by the hotels and travel companies that led the declines – though they did recover – but rather by financial and industrial names.

Venture a Huawei? Boris Johnson approved Chinese company Huawei’s components for use in the UK’s 5G roll-out, but only for peripheral use and limited to 35% of the implementation. It’s a controversial decision, especially for America, balancing economics against political costs. Yet, it keeps the UK 5G roll-out on track as companies planning the 5G network are relying on Huawei components – they’re cost efficient and good quality for the task. Indeed, Vodafone & EE have to scale back their plans to account for Boris’ limits. For the US, as Newt Gingrich put it, the US is “losing the internet to China”. 

California Dreamin’: Cupertino-based Apple’s results were golden, deliciously boosting shares 4.29% including aftermarket gains. Revenue increased 9%, beating company guidance and expectations, on strong iPhone sales and company-wide margin gains. Oh, and Q2 guidance was lifted too, though the range is wider than normal. The dreams were a little scary though for Santa Clara, California-based Advanced Micro Devices – last year’s darling of the market – as the shares slipped 4.3% in the aftermarket (down 1.8% net on the day for +2.9% year-to-date). While their results beat expectations and Microsoft will use their chips, they offered a weaker outlook than investors hoped. 

Taking a peek at the futures, markets look at another up day as US doesn’t order China flight ban
… and the pace of new coronavirus cases looks like it may be slowing very slightly
LVMH (+2.7%) bags another quarter of growth, but the pace slows on Hong Kong protests
SAP (-2.1%) has a near-mist as they struggle to see orders in the high-margin cloud
Defense contractor Lockheed Martin (+1.1%) fired out great earnings on robust F-35 deliveries
United Technologies (+1.6% including aftermarket) had sales on the up escalator gaining 8%
Xerox (+4.9%) printed up 22¢ better earnings than expected while revenue streaked ahead too
Starbucks (-1.2%) served up a mixed brew with good same store sales but missing revenues
Harley Davidson (-3.0%) found revenues were off track and guidance shifted down a gear
The gamut of Greek bonds yield less than the US after first 15-year bond issue in a decade 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +9.21 (+0.67%) at 1,390 (YTD: 1.06%; 5YR: 59.2%)
MSCI AC World Equities (USD) up +69.69 (+0.70%) at 10,047 (YTD: 0.68%; 5YR: 58.8%)
Barclays Global Aggregate Bonds down -1.15 (-0.22%) at 514 (YTD: 0.55%; 5YR: 13.1%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +32.61 (+1.01%) at 3,276 (YTD: 1.41%; 5YR: 62.1%)    
NASDAQ up +130.37 (+1.43%) at 9,270 (YTD: 3.31%; 5YR: 97.9%)    
Euro STOXX 50 up +41.38 (+1.13%) at 3,719 (YTD: -0.69%; 5YR: 10.3%)    
FTSE 100 up +68.64 (+0.93%) at 7,481 (YTD: -0.82%; 5YR: 9.8%)    
CAC up +62.80 (+1.07%) at 5,926 (YTD: -0.87%; 5YR: 27.9%)    
DAX up +118.92 (+0.90%) at 13,324 (YTD: 0.56%; 5YR: 24.1%)    
Nikkei 225  up +163.69 (+0.71%) at 23,379 (YTD: -1.17%; 5YR: 32.8%)    
Hang Seng down -783.66 (-2.80%) at 27,166 (YTD: -3.63%; 5YR: 9.5%)    
MSCI Emerging Markets down -1.26 (-0.11%) at 1,102 (YTD: -1.16%; 5YR: 13.2%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.45 (began the year at 1.57; 5 years ago it was 0.52)    
US 10 Year down -0.02 at 1.64 (began the year at 1.92; 5 years ago it was 1.75)    
UK 10 Year up +0.04 at 0.55 (began the year at 0.82; 5 years ago it was 1.42)    
Germany 10 Year down -0.02 at -0.36 (began the year at -0.19; 5 years ago it was 0.36)
France 10 Year down -0.02 at -0.10 (began the year at 0.12; 5 years ago it was 0.60)    
Italy 10 Year down -0.02 at 1.01 (began the year at 1.41; 5 years ago it was 1.60)    
Japan 10 Year up +0.00 at -0.04 (began the year at -0.02; 5 years ago it was 0.29)    
Barclays EM Basket up +0.02 at 4.08 (began the year at 4.27; 5 years ago it was 4.91)
    
Selected Currencies    
$ strengthened +0.0003 versus € (+0.03%) at 1.1006 ($: YTD: 1.99%; 5YR: 2.6%)    
€ weakened -0.0013 versus £ (+0.11%) at 1.1821 (€: YTD: -0.07%; 5YR: 12.6%)    
$ weakened -0.0011 versus £ (-0.08%) at 1.3010 ($: YTD: 1.91%; 5YR: 13.5%)    
¥ strengthened +0.0800 versus $ (+0.07%) at 109.0500 (¥: YTD: 0.43%; 5YR: 8.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.18 (+0.30%) at 59.51 (YTD: -10.40%; 5YR: 27.0%)    
WTI Crude ($/bbl) up +0.34 (+0.64%) at 53.48 (YTD: -12.41%; 5YR: 20.3%)    
Gold ($/ozt) down -1.40 (-0.09%) at 1568.53 (YTD: 3.00%; 5YR: 24.8%)    
Copper ($/mt) down -40.00 (-0.70%) at 5703.00 (YTD: -7.63%; 5YR: 4.0%)    

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros