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5 March 2020

05/03/2020

Market Data and Morning Chat

Morning Chat 

A bit more bounce: After the Fed’s rate cut found a surprisingly poor investor reception Tuesday, yesterday’s upswing in equity futures was likely greeted with caution. Was Joe Biden’s resounding Super Tuesday recovery enough – it’s still early electorally – and there was little other news countering the Covid-19 scare. Well, US indices rallied significantly and maybe it’s not surprising. Biden’s great showing also forced Bloomberg to pull out consolidating the centre-left vote while Sanders still contends with Warren. Bernie scares businessmen, but Biden or Trump – both much more business-friendly – are more likely now to keep Sanders out of the White House. 

Oil’s a bit more pumped up: One of the least favoured sectors during this coronavirus outbreak is energy, and no wonder, oil prices have slipped back significantly.  Brent dropped from a recent high near $80 to $51 – down 36% – while West Texas oil slipped from nearly $65 to only $47 (a 28% decline). Either supply’s too high, which even with a continued lack of OPEC cuts, the weaker inventory builds contradict, or demand’s too low (or expected to fall) implying a either continued Covid-19 or Bernie effect. Moreover Biden’s success boosted oil further implying the avoidance of the latter is important.

How’s China doing? The total Covid-19 case count is nearly 95,000 with around 80,000 in China and now 15,000 internationally. Focussing on China’s numbers in isolation cases went from a few to 75,000 over 30 days, but over the next 14 days saw only another 5,000. Of those, 51,000 – nearly 64% – have recovered, similar to the infected total 18-20 days ago. If that holds, then nearly 70,000 should recover by Monday or so. But China is also going back to work. If it’s too early, numbers will grow again. If they don’t China’s likely through the worst within a fortnight.

Markets appear to feel that way too – the futures are up again and Asia made solid gains today.
… Some economic ripples will still be felt as Flybe’s calling in of administrators attests to
… as the IMF has also lowered their expectations for global growth calling it “difficult to predict”
… and even James Bond finds November is No Time To Die as the film release is pushed back
But some good news, Campbells (+8.6%) lifted guidance after souper results and big profit beat
…While VW (+1.0%) signed a 3-year deal with Centrica (+3.5%) over home EV-charging points
… and Reckitt Benckiser (+5.4%) rallied the most four years to lead gains in the UK index   

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +34.99 (+2.73%) at 1,317 (YTD: -4.25%; 5YR: 44.0%)
MSCI AC World Equities (USD) up +270.55 (+2.92%) at 9,522 (YTD: -4.57%; 5YR: 44.1%)
Barclays Global Aggregate Bonds up +0.73 (+0.14%) at 527 (YTD: 2.98%; 5YR: 17.7%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +126.75 (+4.22%) at 3,130 (YTD: -3.12%; 5YR: 49.0%)    
NASDAQ up +334.00 (+3.85%) at 9,018 (YTD: 0.51%; 5YR: 81.0%)    
Euro STOXX 50 up +48.59 (+1.44%) at 3,421 (YTD: -8.67%; 5YR: -5.5%)    
FTSE 100 up +97.39 (+1.45%) at 6,816 (YTD: -9.64%; 5YR: -2.1%)    
CAC up +71.72 (+1.33%) at 5,465 (YTD: -8.58%; 5YR: 10.1%)    
DAX up +142.30 (+1.19%) at 12,128 (YTD: -8.46%; 5YR: 5.4%)    
Nikkei 225  up +229.06 (+1.09%) at 21,329 (YTD: -9.84%; 5YR: 13.7%)    
Hang Seng up +569.57 (+2.17%) at 26,792 (YTD: -4.96%; 5YR: 10.7%)    
MSCI Emerging Markets up +9.99 (+0.97%) at 1,038 (YTD: -6.89%; 5YR: 6.5%)    
    
Selected Government Bond Yields    
US 2 Year down -0.05 at 0.65 (began the year at 1.57; 5 years ago it was 0.64)    
US 10 Year down -0.04 at 1.01 (began the year at 1.92; 5 years ago it was 2.12)    
UK 10 Year up +0.02 at 0.39 (began the year at 0.82; 5 years ago it was 1.86)    
Germany 10 Year up +0.02 at -0.62 (began the year at -0.19; 5 years ago it was 0.35)    
France 10 Year up +0.01 at -0.31 (began the year at 0.12; 5 years ago it was 0.65)    
Italy 10 Year down -0.02 at 0.99 (began the year at 1.41; 5 years ago it was 1.30)    
Japan 10 Year up +0.01 at -0.12 (began the year at -0.02; 5 years ago it was 0.40)    
Barclays EM Basket down -0.12 at 3.79 (began the year at 4.27; 5 years ago it was 5.11)
    
Selected Currencies    
$ weakened -0.0007 versus € (-0.06%) at 1.1131 ($: YTD: 0.87%; 5YR: -1.0%)    
€ weakened -0.0027 versus £ (+0.23%) at 1.1572 (€: YTD: 2.08%; 5YR: 19.4%)    
$ weakened -0.0038 versus £ (-0.30%) at 1.2880 ($: YTD: 2.89%; 5YR: 15.4%)    
¥ strengthened +0.1200 versus $ (+0.11%) at 107.3100 (¥: YTD: -1.18%; 5YR: 12.0%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.23 (-0.45%) at 51.37 (YTD: -22.66%; 5YR: -14.6%)    
WTI Crude ($/bbl) down -0.40 (-0.85%) at 46.78 (YTD: -23.39%; 5YR: -9.2%)    
Gold ($/ozt) down -3.20 (-0.19%) at 1638.86 (YTD: 7.62%; 5YR: 36.7%)    
Copper ($/mt) up +17.50 (+0.31%) at 5684.00 (YTD: -7.94%; 5YR: -2.7%)    
    
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