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7 January 2020

07/01/2020

Market Data and Morning Chat

Morning Chat 

Iran, Iraq, Irate: The death of General Qassen Soleimani has dominated global headlines. Iran has seen – at their estimates – millions take to the streets in mourning. Iraq has passed a non-binding ruling ordering the 5,000 US troops in the country to leave. The US said no and European leaders are calling for cooler heads to prevail. So far, it appears investors have kept cooler heads.  Yes, gold rallied and equity indices fell yesterday, with the European indices closing down About ½%. Yet US equities recovered lost ground to close up marginally – possibly on the upwardly revised IHS Markit services PMI.

What could markets make of Markits? If media headlines had not been filled with dire warnings of geo-political turmoil, there might have been a more optimistic tone from examining December’s Markit services PMI data releases. The European data for instance – Germany’s, France’s, Italy’s, Spain’s and even the UK’s – were all better-than-expected and more, an improvement on November’s. The UK number even recovered back to 50.0 when it was expected to deteriorate further.  As a result the Euro-Area score also saw a surprising improvement to a four-month high, driven by new work growth – despite weakening exports –triggering improved employment scores too.

The pain in Spain falls mainly on the reins: Socialist leader Pedro Sánchez Pérez-Castejón has been having trouble forming a government losing Sunday’s vote to get his left wing Socialist-Podemos coalition ratified. Today he tries again, but only needing a relative majority to take the reins of a minority government. Given EU Parliamentary rulings hold the jailed Catalan separatists who have been voted in as MEPs must be allowed to take their seats, Pedro’s coalition could be quickly tested – especially as he needs the Catalan separatists to get his coalition agenda passed. He’ll need to dance longer than all night.

… yet, blimey, Spain’s growth has been better (around +1.9%) without an effective government
As to outlook, today’s futures are generally pointing up ¼% or so with Asian indices up too
… and gold & oil trading down today as Mid-East tensions appear for now to ease slightly
BP (+2.0%) was pumped on the back of those higher oil prices, Royal Dutch (+0.5%) less so.
Oh, just to chip in, Texas Instruments (+1.6% afterhours) on Microchip co’s improved forecast 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -1.30 (-0.09%) at 1,380 (YTD: 0.34%; 5YR: 61.9%)
MSCI AC World Equities (USD) up +6.43 (+0.06%) at 10,007 (YTD: 0.28%; 5YR: 61.2%)
Barclays Global Aggregate Bonds down -0.05 (-0.01%) at 513 (YTD: 0.33%; 5YR: 12.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +11.43 (+0.35%) at 3,246 (YTD: 0.48%; 5YR: 60.2%)    
NASDAQ up +50.70 (+0.56%) at 9,071 (YTD: 1.10%; 5YR: 95.1%)    
Euro STOXX 50 down -20.85 (-0.55%) at 3,753 (YTD: 0.20%; 5YR: 24.0%)    
FTSE 100 down -47.06 (-0.62%) at 7,575 (YTD: 0.44%; 5YR: 18.0%)    
CAC down -30.57 (-0.51%) at 6,014 (YTD: 0.59%; 5YR: 46.2%)    
DAX down -92.15 (-0.70%) at 13,127 (YTD: -0.92%; 5YR: 37.9%)    
Nikkei 225  up +370.86 (+1.60%) at 23,576 (YTD: -0.34%; 5YR: 39.6%)    
Hang Seng up +152.70 (+0.54%) at 28,379 (YTD: 0.67%; 5YR: 19.8%)    
MSCI Emerging Markets down -11.34 (-1.01%) at 1,113 (YTD: -0.19%; 5YR: 18.2%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.55 (began the year at 1.57; 5 years ago it was 0.61)    
US 10 Year up +0.01 at 1.81 (began the year at 1.92; 5 years ago it was 1.97)    
UK 10 Year up +0.03 at 0.77 (began the year at 0.82; 5 years ago it was 1.62)    
Germany 10 Year up +0.04 at -0.25 (began the year at -0.19; 5 years ago it was 0.48)    
France 10 Year up +0.03 at 0.05 (began the year at 0.12; 5 years ago it was 0.79)    
Italy 10 Year down -0.05 at 1.31 (began the year at 1.41; 5 years ago it was 1.90)    
Japan 10 Year up +0.00 at -0.03 (began the year at -0.02; 5 years ago it was 0.30)    
Barclays EM Basket down -0.03 at 4.24 (began the year at 4.27; 5 years ago it was 5.24)
    
Selected Currencies    
$ strengthened +0.0011 versus € (+0.10%) at 1.1184 ($: YTD: 0.40%; 5YR: 5.5%)    
€ weakened -0.0011 versus £ (+0.09%) at 1.1765 (€: YTD: 0.41%; 5YR: 8.4%)    
$ strengthened +0.0002 versus £ (+0.02%) at 1.3158 ($: YTD: 0.79%; 5YR: 12.8%)    
¥ weakened -0.0300 versus $ (-0.03%) at 108.3800 (¥: YTD: -0.18%; 5YR: 10.3%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.29 (-0.42%) at 68.73 (YTD: 3.48%; 5YR: 37.0%)    
WTI Crude ($/bbl) up +0.22 (+0.35%) at 63.27 (YTD: 3.62%; 5YR: 32.0%)    
Gold ($/ozt) up +1.41 (+0.09%) at 1566.02 (YTD: 2.84%; 5YR: 29.0%)    
Copper ($/mt) up +9.00 (+0.15%) at 6138.50 (YTD: -0.57%; 5YR: -0.1%)    
    
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