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22 November 2019

22/11/2019

Market Data and Morning Chat

Morning Chat 

Don’t stop ‘til you get enough: The UK public sector net borrowing rose to £10.51billion – a thirty-one month high – as corporation tax fell 6.2%, the biggest drop in four years. Government spending rose by over 3% helping push this year’s spending so far to a higher level than all of last year. Yet it still pales into insignificance when you listen to the Tory and Labour spending plans.  The Labour party manifesto alone plans for an astronomical annual £83billion increase in spending and £55billion in investment alongside a massive nationalisation plan. It’ll take some tax to pay for all that.

Beat it: Yes, UK stocks fell yesterday, but there were good news stories all the same. OK, the 14.2% decline in Royal Mail over their slower-than-hoped delivery of their turnaround plans put a negative stamp on the day. Yet Centrica saw their shares heat up, rising 9.1% when they confirmed cash flow and earnings guidance. Direct Line (+6.4%) ensured their shares made gains announcing plans to cut costs. Then British American Tobacco shares were up a smoking 3.9% after the US FDA stubbed out regulations to tightly restrict nicotine in cigarettes. At least they showed how strong is their fight.

Wanna be startin’ somethin’: Despite ongoing impeachment hearings, Congress has still been busy, but they’re still somewhat stuck in the middle.  The House and Senate both passed a bill effectively condemning the cause for the Hong Kong riots – and likely pushing back any US-China trade deal over the interference.  Then Congress passed a budgetary continuing resolution as a full spending plan is a hurdle too high to get over, and the pain is agreeing the USMCA.  You may have heard this, but they’ve made progress, a deal could be imminent, but there are a few points to clear up. Hmmm.

…There’s still hope though as China’s chief negotiator invited the Americans for more talks
… which appears to be boosting market futures this morning by ¼ to ½%
Johnson Matthey’s (-7.1%) revenues were pretty shiny, but conversion into profits sputtered 
Steel yourself, ThyssenKrupp (--13.6%) tumbled after cutting their dividend and recording a loss
Bloomberg filed paperwork yesterday to allow him to raise funds for an election campaign

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -3.58 (-0.27%) at 1,326 (YTD: 22.35%; 5YR: 51.8%)
MSCI AC World Equities (USD) down -18.41 (-0.19%) at 9,589 (YTD: 23.38%; 5YR: 48.1%)
Barclays Global Aggregate Bonds down -0.36 (-0.07%) at 509 (YTD: 6.34%; 5YR: 11.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -4.92 (-0.16%) at 3,104 (YTD: 23.80%; 5YR: 50.4%)    
NASDAQ down -20.52 (-0.24%) at 8,506 (YTD: 28.20%; 5YR: 80.5%)    
Euro STOXX 50 down -4.22 (-0.11%) at 3,680 (YTD: 22.60%; 5YR: 15.2%)    
FTSE 100 down -23.94 (-0.33%) at 7,239 (YTD: 7.59%; 5YR: 7.2%)    
CAC down -12.82 (-0.22%) at 5,881 (YTD: 24.32%; 5YR: 35.3%)    
DAX down -20.44 (-0.16%) at 13,138 (YTD: 24.42%; 5YR: 35.0%)    
Nikkei 225  up +74.30 (+0.32%) at 23,113 (YTD: 15.48%; 5YR: 33.2%)    
Hang Seng up +84.56 (+0.32%) at 26,551 (YTD: 2.73%; 5YR: 13.3%)    
MSCI Emerging Markets down -7.42 (-0.71%) at 1,045 (YTD: 8.16%; 5YR: 4.0%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.61 (began the year at 2.49; 5 years ago it was 0.50)    
US 10 Year down 0.00 at 1.77 (began the year at 2.68; 5 years ago it was 2.31)    
UK 10 Year up +0.02 at 0.75 (began the year at 1.28; 5 years ago it was 2.05)    
Germany 10 Year up +0.01 at -0.32 (began the year at 0.24; 5 years ago it was 0.77)    
France 10 Year up +0.01 at -0.01 (began the year at 0.70; 5 years ago it was 1.11)    
Italy 10 Year up +0.03 at 1.21 (began the year at 2.74; 5 years ago it was 2.21)    
Japan 10 Year up +0.02 at -0.09 (began the year at -0.01; 5 years ago it was 0.46)    
Barclays EM Basket up +0.00 at 5.44 (began the year at 6.22; 5 years ago it was 5.10)
    
Selected Currencies    
$ weakened -0.0004 versus € (-0.04%) at 1.1067 ($: YTD: 3.36%; 5YR: 10.7%)    
€ weakened -0.0003 versus £ (+0.03%) at 1.1668 (€: YTD: -4.61%; 5YR: 8.3%)    
$ weakened -0.0010 versus £ (-0.08%) at 1.2914 ($: YTD: -1.32%; 5YR: 17.5%)    
¥ strengthened +0.0300 versus $ (+0.03%) at 108.5800 (¥: YTD: -0.99%; 5YR: 8.5%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.04 (-0.06%) at 63.03 (YTD: 18.54%; 5YR: -20.4%)    
WTI Crude ($/bbl) up +1.42 (+2.49%) at 58.53 (YTD: 28.89%; 5YR: -23.4%)    
Gold ($/ozt) up +3.70 (+0.25%) at 1468.05 (YTD: 14.47%; 5YR: 22.2%)    
Copper ($/mt) down -46.00 (-0.78%) at 5829.00 (YTD: -2.28%; 5YR: -13.3%)    
    
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