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21 November 2019

21/11/2019

Market Data and Morning Chat

Morning Chat 

Now do it with one hand tied behind your back: Just when everyone thought a US-China trade deal was ever so close, with the Chinese commenting a phase one deal was agreed and Larry Kudlow saying only a few details needed to be ironed out, the situation faces a set-back.  Yesterday, both chambers of the US Congress passed legislation – a bill to protect human rights in Hong Kong and another to curb munitions sales to the Hong Kong police – that will annoy the Chinese and make negotiating much harder.  No wonder global equity markets gave up ½ to ¾% yesterday.

But that’s not all folks! So US stocks were unsurprisingly down on the China news, yet it was  more nuanced than that.  Defensive sectors – staples, real estate and utilities – actually posted gains, while industrials, materials and communications services led decliners. The story was fairly similar in Europe. Moreover, it probably didn’t help that the minutes of the Federal Reserve’s last meeting significantly tempered any suggestion of another rate cut  At least bonds were somewhat indifferent in their response, the dollar didn’t move much against sterling or the euro, and oil rallied – bolstering energy sector equities – after a softer oil inventory report.

Quid pro quo, quid pro nihilo: The US Democrats new favorite term is quid pro quo, something for something, as US ambassador to the EU Gordon Sondland testified Trump predicated Ukrainian aid on getting an investigation into the Bidens. But is it explosive stuff or a damp squib? Senate Republicans are still behind Trump, noting Sondland himself said he never actually heard Trump comment directly, but that he presumed it must have been his reason for withholding aid. More, as some point out, aid was actually given but there was no investigation Something for nothing is hardly an impeachable act.

Given the general tone of trade news yesterday was negative, it isn’t a surprise futures are down
… although, China’s trade negotiator Liu He later stated he was cautiously optimistic for a deal
Corbyn’s Labour party manifesto will detail plans to target those who “profit from a rigged system” 
…While Target (+14.1%) made investors richer as their sales plans had the right profit details
Lowe’s (+3.9%) saw shares improve to a record high on improved guidance and Canadian plans

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -4.95 (-0.37%) at 1,329 (YTD: 22.68%; 5YR: 52.2%)
MSCI AC World Equities (USD) down -40.82 (-0.42%) at 9,607 (YTD: 23.62%; 5YR: 48.4%)
Barclays Global Aggregate Bonds up +0.30 (+0.06%) at 510 (YTD: 6.41%; 5YR: 11.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -11.72 (-0.38%) at 3,108 (YTD: 24.00%; 5YR: 50.6%)    
NASDAQ down -43.93 (-0.51%) at 8,527 (YTD: 28.51%; 5YR: 80.9%)    
Euro STOXX 50 down -12.68 (-0.34%) at 3,684 (YTD: 22.74%; 5YR: 15.3%)    
FTSE 100 down -61.31 (-0.84%) at 7,262 (YTD: 7.94%; 5YR: 7.6%)    
CAC down -15.02 (-0.25%) at 5,894 (YTD: 24.59%; 5YR: 35.6%)    
DAX down -62.98 (-0.48%) at 13,158 (YTD: 24.62%; 5YR: 35.2%)    
Nikkei 225  down -109.99 (-0.48%) at 23,039 (YTD: 15.11%; 5YR: 32.7%)    
Hang Seng down -421.38 (-1.57%) at 26,468 (YTD: 2.41%; 5YR: 12.9%)    
MSCI Emerging Markets down -5.16 (-0.49%) at 1,052 (YTD: 8.93%; 5YR: 4.7%)    
    
Selected Government Bond Yields    
US 2 Year down 0.00 at 1.57 (began the year at 2.49; 5 years ago it was 0.50)    
US 10 Year down -0.01 at 1.74 (began the year at 2.68; 5 years ago it was 2.31)    
UK 10 Year down 0.00 at 0.73 (began the year at 1.28; 5 years ago it was 2.05)    
Germany 10 Year down 0.00 at -0.35 (began the year at 0.24; 5 years ago it was 0.77)    
France 10 Year up +0.00 at -0.04 (began the year at 0.70; 5 years ago it was 1.11)    
Italy 10 Year down 0.00 at 1.20 (began the year at 2.74; 5 years ago it was 2.21)    
Japan 10 Year unchanged at -0.12 (began the year at -0.01; 5 years ago it was 0.46)    
Barclays EM Basket down -0.01 at 5.44 (began the year at 6.22; 5 years ago it was 5.10)
    
Selected Currencies    
$ weakened -0.0008 versus € (-0.07%) at 1.1075 ($: YTD: 3.29%; 5YR: 10.6%)    
€ strengthened +0.0003 versus £ (-0.03%) at 1.1673 (€: YTD: -4.65%; 5YR: 8.2%)    
$ weakened -0.0004 versus £ (-0.03%) at 1.2926 ($: YTD: -1.41%; 5YR: 17.4%)    
¥ weakened -0.0400 versus $ (-0.04%) at 108.5800 (¥: YTD: -0.99%; 5YR: 8.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.78 (-1.25%) at 61.83 (YTD: 16.29%; 5YR: -21.9%)    
WTI Crude ($/bbl) up +1.90 (+3.44%) at 57.11 (YTD: 25.77%; 5YR: -24.4%)    
Gold ($/ozt) down -1.28 (-0.09%) at 1470.35 (YTD: 14.65%; 5YR: 22.4%)    
Copper ($/mt) unchanged 0.00 (0.00%) at 5875.00 (YTD: -1.51%; 5YR: -11.9%)    
    
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