!css

13 January 2020

13/01/2020

Market Data and Morning Chat

Morning Chat 

Truth, you can’t handle the truth: Last week, Canadian Prime Minister Justin Trudeau said that the evidence suggested an Iranian missile brought down Ukrainian International Airlines flight PS752. After various denials, Iran admitted that in an atmosphere of high tension, the plane was misidentified as a cruise missile and shot down.  Their admission, assuming it’s followed by contrition and co-operation – especially on the nuclear deal – may appease international opinion, but it has triggered two days so far of protests in Iran. Given elections due in a month, the circumstances could have serious political ramifications, and, one hopes, may de-escalate tensions.

Fewer good men (and women): ADP’s US employment survey release was notably ahead of expectations, though within a standard deviation of expectations – statistically speaking a not-unlikely result. With only 164,000 expected for the US non-farm payrolls, there was hope for another statistically optimistic result, but no. The payrolls data came in at 145,000 (similarly a statistically not-unlikely result) impacted by a later-than-usual Thanksgiving.  The weaker manufacturing hires coupled with weak PMI data also added to the disappointment. Disappointing, but not thoroughly depressing as US equity markets only closed down around a ¼% after hitting all-time highs earlier in the week.

What do you wanna talk about now, my favourite colour? From an investment point of view, green. Definitely green. This coming week, however, a splash of red might help given Beijing’s trade delegation arrives in Washington and the signing of a phase one deal – assuming it isn’t derailed by some tweet. It means investors finally get to see what details are part of this first stage agreement. In the UK we’ll discover if Q4’s Brexit shenanigans did crimp quarterly GDP growth to 0.1% as forecast. Be great if it didn’t.  Plus there’s the JOLTS and German GDP this week too.

… and green it is as Asian markets mainly open the week up and European & US futures rise.
French, Spanish and Italian industrial production numbers Friday were all ahead of expectations
…UK GDP and industrial production numbers will be released today at 9:30 am, then
…Earnings season will open tomorrow with the major US banks leading off the announcements
… as they come off a year when the US bank stocks index beat the main index with 30% gain
International Airlines Group (+4.6%), BA’s parent, and Easyjet (+4.2%) up on oil price fall

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -1.13 (-0.08%) at 1,393 (YTD: 1.28%; 5YR: 61.9%)
MSCI AC World Equities (USD) down -9.45 (-0.09%) at 10,065 (YTD: 0.86%; 5YR: 60.6%)
Barclays Global Aggregate Bonds up +0.97 (+0.19%) at 511 (YTD: -0.14%; 5YR: 11.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -9.35 (-0.29%) at 3,265 (YTD: 1.07%; 5YR: 61.4%)    
NASDAQ down -24.57 (-0.27%) at 9,179 (YTD: 2.30%; 5YR: 96.9%)    
Euro STOXX 50 down -6.36 (-0.17%) at 3,790 (YTD: 1.18%; 5YR: 20.9%)    
FTSE 100 down -10.27 (-0.14%) at 7,588 (YTD: 0.60%; 5YR: 16.0%)    
CAC down -5.44 (-0.09%) at 6,037 (YTD: 0.99%; 5YR: 40.7%)    
DAX down -11.75 (-0.09%) at 13,483 (YTD: 1.77%; 5YR: 35.6%)    
Nikkei 225  up +110.70 (+0.47%) at 23,851 (YTD: 0.82%; 5YR: 39.6%)    
Hang Seng up +313.67 (+1.10%) at 28,952 (YTD: 2.70%; 5YR: 19.6%)    
MSCI Emerging Markets up +4.26 (+0.38%) at 1,134 (YTD: 1.70%; 5YR: 18.1%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.57 (began the year at 1.57; 5 years ago it was 0.54)    
US 10 Year up +0.01 at 1.83 (began the year at 1.92; 5 years ago it was 1.90)    
UK 10 Year down -0.05 at 0.77 (began the year at 0.82; 5 years ago it was 1.58)    
Germany 10 Year up +0.00 at -0.20 (began the year at -0.19; 5 years ago it was 0.48)    
France 10 Year up +0.01 at 0.05 (began the year at 0.12; 5 years ago it was 0.74)    
Italy 10 Year up +0.02 at 1.34 (began the year at 1.41; 5 years ago it was 1.81)    
Japan 10 Year down -0.01 at -0.01 (began the year at -0.02; 5 years ago it was 0.26)    
Barclays EM Basket down -0.02 at 4.23 (began the year at 4.27; 5 years ago it was 5.21)
    
Selected Currencies    
$ weakened -0.0004 versus € (-0.04%) at 1.1126 ($: YTD: 0.92%; 5YR: 5.6%)    
€ strengthened +0.0051 versus £ (-0.44%) at 1.1692 (€: YTD: 1.03%; 5YR: 10.0%)    
$ strengthened +0.0054 versus £ (+0.41%) at 1.3008 ($: YTD: 1.92%; 5YR: 14.2%)    
¥ weakened -0.1400 versus $ (-0.13%) at 109.6200 (¥: YTD: 0.95%; 5YR: 7.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.37 (-0.57%) at 64.92 (YTD: -2.26%; 5YR: 40.1%)    
WTI Crude ($/bbl) down -0.52 (-0.87%) at 59.04 (YTD: -3.31%; 5YR: 22.1%)    
Gold ($/ozt) down -6.23 (-0.40%) at 1553.28 (YTD: 2.00%; 5YR: 25.6%)    
Copper ($/mt) up +18.00 (+0.29%) at 6198.00 (YTD: 0.39%; 5YR: 1.8%)    
    
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