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15 November 2019

15/11/2019

Market Data and Morning Chat

Morning Chat 

Wishful thinking: Yesterday, early morning futures signalled a slight fall in European equity markets, and if you watched the day go by, that’s what you saw, falling markets.  There’s no secret kept in here, the decline was triggered by the apparent impasse in trade talks between the US and China. Crisis? Not yet, both sides say a deal is still close, but it stumbles on US demands for intellectual property concessions and, regarding forced technology transfers, a wish to stop it all. Conversely, China wants all tariffs rolled back to make it all worthwhile. At least they’re talking about it.

Look beyond China: One might think any gulf in the talks would shatter investor confidence and send equity markets decidedly lower, but there was good news when you looked beyond US-China trade.  Despite the ongoing impeachment proceedings, Nancy Pelosi noted the NAFTA replacement USMCA trade deal was looking at an imminent breakthrough in Congress.  Meanwhile, Germany avoided slipping into technical recession by growing 0.1% and pushing Eurozone growth to 0.2%. Finally, Fed Chairman Jerome Powell said the US expansion was sustainable, that the national debt and deficit levels are not a threat and nothing’s booming that would want to bust.

See-saw seen in oil prices: With Powell saying the US economy was still looking good and a spokesman for the Organisation of Petroleum Exporting Countries – OPEC – declaring they saw no signs of a global recession, there was an unsurprising uplift in oil prices.  Given prices have been fairly steady for most of the month (around $62 for Brent, $57 for West Texas), a quick $1 gain was notable… but short-lived. No sooner were prices rising than the Energy Information Administration announced downbeat news leading with an inventory build greater than expected. So those oil price gains evaporated straight back down.

So not all good news – UK retail sales were slightly down 0.1% on the month rather than up
… but futures are us as the White House advisor Kudlow says deal “down to the short strokes”
Labour wants to nationalise broadband – let’s hope they don’t take it back to 1970 speeds too
National Grid (+0.3%) expects accelerating earnings and believes they can address NY charges
3I (-4.6%) – the company not infrastructure – sees shares down on lower net asset value
Burberry (+3.4%) battled back against the Hong Kong riots to see profits up 11% at £193million
Shares in Qinetiq (+9.2%) rocketed up on reconfirmed guidance and a 16% rise in profits

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) down -1.33 (-0.10%) at 1,323 (YTD: 22.15%; 5YR: 53.5%)
MSCI AC World Equities (USD) down -9.58 (-0.10%) at 9,563 (YTD: 23.05%; 5YR: 49.5%)
Barclays Global Aggregate Bonds up +1.08 (+0.21%) at 508 (YTD: 5.97%; 5YR: 10.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +2.59 (+0.08%) at 3,097 (YTD: 23.53%; 5YR: 51.8%)    
NASDAQ down -3.08 (-0.04%) at 8,479 (YTD: 27.79%; 5YR: 80.8%)    
Euro STOXX 50 down -10.69 (-0.29%) at 3,689 (YTD: 22.90%; 5YR: 20.5%)    
FTSE 100 down -58.45 (-0.80%) at 7,293 (YTD: 8.39%; 5YR: 9.6%)    
CAC down -6.01 (-0.10%) at 5,901 (YTD: 24.74%; 5YR: 40.4%)    
DAX down -49.84 (-0.38%) at 13,180 (YTD: 24.83%; 5YR: 42.4%)    
Nikkei 225  up +161.77 (+0.70%) at 23,303 (YTD: 16.43%; 5YR: 33.2%)    
Hang Seng down -5.43 (-0.02%) at 26,318 (YTD: 1.83%; 5YR: 9.3%)    
MSCI Emerging Markets down -1.58 (-0.15%) at 1,042 (YTD: 7.92%; 5YR: 5.2%)    
    
Selected Government Bond Yields    
US 2 Year up +0.01 at 1.61 (began the year at 2.49; 5 years ago it was 0.51)    
US 10 Year up +0.02 at 1.84 (began the year at 2.68; 5 years ago it was 2.32)    
UK 10 Year down -0.05 at 0.71 (began the year at 1.28; 5 years ago it was 2.12)    
Germany 10 Year up +0.02 at -0.34 (began the year at 0.24; 5 years ago it was 0.78)    
France 10 Year up +0.01 at -0.01 (began the year at 0.70; 5 years ago it was 1.14)    
Italy 10 Year down -0.02 at 1.30 (began the year at 2.74; 5 years ago it was 2.34)    
Japan 10 Year unchanged at -0.08 (began the year at -0.01; 5 years ago it was 0.48)    
Barclays EM Basket down -0.01 at 5.48 (began the year at 6.22; 5 years ago it was 5.18)
    
Selected Currencies    
$ weakened -0.0001 versus € (-0.01%) at 1.1019 ($: YTD: 3.78%; 5YR: 11.9%)    
€ strengthened +0.0004 versus £ (-0.03%) at 1.1686 (€: YTD: -4.76%; 5YR: 7.1%)    
$ strengthened +0.0002 versus £ (+0.02%) at 1.2877 ($: YTD: -1.03%; 5YR: 17.8%)    
¥ weakened -0.2000 versus $ (-0.18%) at 108.5400 (¥: YTD: -1.03%; 5YR: 7.2%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.05 (+0.08%) at 63.04 (YTD: 18.56%; 5YR: -19.5%)    
WTI Crude ($/bbl) down -0.35 (-0.61%) at 56.77 (YTD: 25.02%; 5YR: -25.1%)    
Gold ($/ozt) down -7.29 (-0.50%) at 1464.11 (YTD: 14.17%; 5YR: 23.2%)    
Copper ($/mt) down -23.00 (-0.39%) at 5812.00 (YTD: -2.56%; 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