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27 November 2019

27/11/2019

Market Data and Morning Chat

Morning Chat 

Nervously: Sterling weakened yesterday, slipping 0.3% to $1.286 and 0.4% to €1.167 on polling suggesting a 1-3% shift towards Labour.  At least the currency slip allowed UK equities to rally higher. Boris Johnson might be thinking “I want to wake up” from a nightmare of repeating May’s election when Labour gained on the back of the University fees pledge. However he’s got some reasonable consolation. Looking at YouGov’s poll – the only one conducted fully after the launch of the manifestos – the shift is only 1%.  Moreover, only the ICM poll has given less than a double-digit lead for two weeks.

Being boring: For most other major equity markets it proved to be a red letter day on, boringly, continued US-China trade talks optimism.  We may not actually have a phase one deal yet – despite numerous opportunities – but at least both the American and Chinese authorities seem to be taking pains to say it’s alright, they’re very close to an agreement.  Such announcements were enough to offset the disappointing US new home sales which fell back 0.7% rather than increase as expected. It was also enough to offset the weaker Conference Board consumer confidence number and rise in wholesale inventories too. 

Absolutely fabulous: UK industrials such as CRH (+2.9%), Croda (+2.6%), Melrose (+2.5%) and Ashtead (+2.4%) all showed solid gains with the sterling weakness, but it was in the US that saw the biggest gains. Best Buy (+12.9%) lived up to its name, doubling its year-to-date gains and lifting retail sector stocks – with the help of Disk’s Sporting Goods (+18.6%) – on the back of solid quarterly earnings and improved guidance. Furthermore, Novartis’ $9.1billion bid for Medicines co. helped biotechs rally early (though the sector settled back to close up 0.2%). All of which helped the S&P500 to a new all-time high.

Futures up as Trump declares negotiations in “final throes” of sealing a deal
Miner Fresnillo (+6.8%) golden a day after hitting 52-week low on rising metals prices
Chinese AliBaba (+3.9%) has a strong rally as it says open sesame on new Hong Kong listing
De La Rue (-23.5%) notes “there is a material uncertainty” on remaining a going concern
Compass Group (-7.5%) less magnetic after warning lower confidence in Europe is hurting returns

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +1.83 (+0.14%) at 1,341 (YTD: 23.78%; 5YR: 52.8%)
MSCI AC World Equities (USD) up +17.69 (+0.18%) at 9,693 (YTD: 24.72%; 5YR: 49.1%)
Barclays Global Aggregate Bonds up +0.64 (+0.13%) at 509 (YTD: 6.31%; 5YR: 10.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +6.88 (+0.22%) at 3,141 (YTD: 25.28%; 5YR: 51.5%)    
NASDAQ up +15.45 (+0.18%) at 8,648 (YTD: 30.33%; 5YR: 80.6%)    
Euro STOXX 50 down -2.13 (-0.06%) at 3,706 (YTD: 23.46%; 5YR: 14.2%)    
FTSE 100 up +6.85 (+0.09%) at 7,403 (YTD: 10.03%; 5YR: 10.1%)    
CAC up +4.76 (+0.08%) at 5,930 (YTD: 25.34%; 5YR: 35.3%)    
DAX down -10.03 (-0.08%) at 13,236 (YTD: 25.36%; 5YR: 32.7%)    
Nikkei 225  up +64.45 (+0.28%) at 23,438 (YTD: 17.10%; 5YR: 35.9%)    
Hang Seng up +11.42 (+0.04%) at 26,925 (YTD: 4.18%; 5YR: 12.2%)    
MSCI Emerging Markets down -5.64 (-0.53%) at 1,048 (YTD: 8.50%; 5YR: 3.5%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.59 (began the year at 2.49; 5 years ago it was 0.52)    
US 10 Year down 0.00 at 1.74 (began the year at 2.68; 5 years ago it was 2.24)    
UK 10 Year down -0.05 at 0.65 (began the year at 1.28; 5 years ago it was 1.92)    
Germany 10 Year up +0.02 at -0.35 (began the year at 0.24; 5 years ago it was 0.70)    
France 10 Year up +0.03 at -0.03 (began the year at 0.70; 5 years ago it was 0.99)    
Italy 10 Year up +0.02 at 1.19 (began the year at 2.74; 5 years ago it was 2.06)    
Japan 10 Year up +0.01 at -0.09 (began the year at -0.01; 5 years ago it was 0.42)    
Barclays EM Basket up +0.00 at 5.48 (began the year at 6.22; 5 years ago it was 5.03)
    
Selected Currencies    
$ strengthened +0.0008 versus € (+0.07%) at 1.1012 ($: YTD: 3.84%; 5YR: 11.7%)    
€ strengthened +0.0019 versus £ (-0.16%) at 1.1652 (€: YTD: -4.48%; 5YR: 8.2%)    
$ strengthened +0.0032 versus £ (+0.25%) at 1.2830 ($: YTD: -0.66%; 5YR: 18.4%)    
¥ weakened -0.1000 versus $ (-0.09%) at 109.1800 (¥: YTD: -0.44%; 5YR: 7.9%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.03 (+0.05%) at 63.73 (YTD: 19.86%; 5YR: -11.1%)    
WTI Crude ($/bbl) up +0.47 (+0.81%) at 58.41 (YTD: 28.63%; 5YR: -20.7%)    
Gold ($/ozt) down -2.42 (-0.17%) at 1458.97 (YTD: 13.76%; 5YR: 22.5%)    
Copper ($/mt) up +56.00 (+0.95%) at 5924.00 (YTD: -0.69%; 5YR: -9.8%)    
    
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