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14 November 2019

14/11/2019

Market Data and Morning Chat

Morning Chat 

The aroma of subtle optimism: Frustratingly, news on any US-China trade deal – phase one or otherwise – remains elusive. Despite both sides being close to a deal, there are still a few stumbling blocks; in the main, the US wants tougher intellectual property right safeguards while China is reticent on their agricultural purchase commitments. The likelihood of an imminent deal helped US equity markets bounce up, so you would think a delay would trim gains, yet the Dow and S&P500 set new all-time highs yesterday before retreating slightly. Market momentum appears to remain favourable presumably assuming a deal is still forthcoming.

However, the Europeans were less enthusiastic: Across the continent – and here in the UK – equity markets were generally down between ¼ to ¾%. Certainly the continued delay over the trade deal was a factor, but the poor showing by the banks that was also telling. ABN Amro, Commerzbank and Deutsche Bank were all down more than 4% and the trigger was US Fed Chairman Jerome Powell’s comments that US rates were unlikely to rise soon.  Limited change in US rates implies steady European rates and trouble for banks’ bottom lines – as yesterday’s reported 24% decline in ABN’s net profits highlights.

Opening salvoes: After weeks of closed door interviews, the Democrats kicked off the opening day of the public impeachment hearings with their first two witnesses, Trump administration officials Bill Taylor and George Kent.  The tack the Democrats are sticking to is to keep the argument simple – Trump breached his oath of office when he pressured the Ukrainian President to conduct an investigation into the Bidens in exchange for aid – and if they can shift public opinion, it’ll be too dangerous for the Republicans not to support the indictment. The Republicans aim to show the whole thing a theatrical partisan sham. 

Rezession? Nein! German GDP Q3 growth surprisingly rises 0.1% … on government spending!
… not that the outcome has moved the European futures to show much but red this morning
On these cold days it’s warming to know UK inflation fell to a 3-year low on lower energy prices
Coca-Cola HBC (+6.1%) on the bubble as new packaging and pricing puts the fizz in sales
Taylor Wimpey (-2.1%) finds less room in the house for margins as they trim guidance
British Land (-3.3%) highlights the tough side for property as rent reductions trims property
Must be gutting for a CEO to see your shares rise when you leave – like Unilever (+0.6%)
 

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -2.56 (-0.19%) at 1,325 (YTD: 22.27%; 5YR: 53.7%)
MSCI AC World Equities (USD) down -6.84 (-0.07%) at 9,573 (YTD: 23.17%; 5YR: 49.7%)
Barclays Global Aggregate Bonds up +1.13 (+0.22%) at 506 (YTD: 5.75%; 5YR: 10.6%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +2.20 (+0.07%) at 3,094 (YTD: 23.42%; 5YR: 51.7%)    
NASDAQ down -3.99 (-0.05%) at 8,482 (YTD: 27.83%; 5YR: 80.9%)    
Euro STOXX 50 down -12.70 (-0.34%) at 3,700 (YTD: 23.26%; 5YR: 20.9%)    
FTSE 100 down -14.23 (-0.19%) at 7,351 (YTD: 9.26%; 5YR: 10.5%)    
CAC down -12.66 (-0.21%) at 5,907 (YTD: 24.87%; 5YR: 40.6%)    
DAX down -53.44 (-0.40%) at 13,230 (YTD: 25.30%; 5YR: 43.0%)    
Nikkei 225  down -178.32 (-0.76%) at 23,142 (YTD: 15.62%; 5YR: 32.3%)    
Hang Seng down -259.22 (-0.98%) at 26,312 (YTD: 1.81%; 5YR: 9.2%)    
MSCI Emerging Markets down -12.01 (-1.14%) at 1,044 (YTD: 8.08%; 5YR: 5.4%)    
    
Selected Government Bond Yields    
US 2 Year down -0.01 at 1.62 (began the year at 2.49; 5 years ago it was 0.51)    
US 10 Year down -0.02 at 1.86 (began the year at 2.68; 5 years ago it was 2.32)    
UK 10 Year down -0.05 at 0.76 (began the year at 1.28; 5 years ago it was 2.12)    
Germany 10 Year down -0.01 at -0.31 (began the year at 0.24; 5 years ago it was 0.78)    
France 10 Year down -0.01 at 0.00 (began the year at 0.70; 5 years ago it was 1.14)    
Italy 10 Year down -0.02 at 1.23 (began the year at 2.74; 5 years ago it was 2.34)    
Japan 10 Year down -0.03 at -0.08 (began the year at -0.01; 5 years ago it was 0.48)    
Barclays EM Basket up +0.01 at 5.49 (began the year at 6.22; 5 years ago it was 5.18)
    
Selected Currencies    
$ weakened -0.0003 versus € (-0.03%) at 1.1002 ($: YTD: 3.93%; 5YR: 12.1%)    
€ strengthened +0.0005 versus £ (-0.04%) at 1.1667 (€: YTD: -4.60%; 5YR: 7.2%)    
$ strengthened +0.0004 versus £ (+0.03%) at 1.2836 ($: YTD: -0.71%; 5YR: 18.0%)    
¥ strengthened +0.1400 versus $ (+0.13%) at 108.7100 (¥: YTD: -0.87%; 5YR: 7.0%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.23 (+0.36%) at 63.35 (YTD: 19.15%; 5YR: -19.1%)    
WTI Crude ($/bbl) up +0.32 (+0.56%) at 57.12 (YTD: 25.79%; 5YR: -23.0%)    
Gold ($/ozt) up +3.08 (+0.21%) at 1466.63 (YTD: 14.36%; 5YR: 23.4%)    
Copper ($/mt) down -34.00 (-0.58%) at 5835.00 (YTD: -2.18%; 5YR: -12.3%)    
    
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