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18 November 2019

18/11/2019

Market Data and Morning Chat

Morning Chat 

A bit muddled: Last week’s equity markets swung up and down, driven by shifting perceptions of a successful US-China trade deal.  US indices repeatedly hit new all-time highs, with the Dow Jones closing the week marginally below 28,000, up slightly more than 1% on the week. Hop over to Europe and it was more low-key.  The UK fell slightly more than ¾%, Germany was flat and France rallied up ¾%.  Asia, though, saw pronounced declines.  At least we closed the week on an upbeat view after White House economic advisor Larry Kudlow said, yet again, a deal was close.

So we’re waiting for deal news? Well, yes.  Given the temporary licences to trade with Huawei expire soon, and a deal is seen to be so close, you have to expect trade news to move the markets – even on whispered commentary.  But there is more. The US Fed will spread out the tea-leaves for investors to read and decide if there might be fourth cut or a hike as the next move. There’s US housing data and Spanish & Italian industrial production. Then, US, Brexit-convulsed UK, Germany and France will see flash Markit manufacturing data will close out the week.

Polls apart: There appear to be two clusters of polling for the UK election. Pollsters ICM, ComRes and Survation have been fairly consistently putting the Conservative lead over Labour at 6-8% - enough for a majority, but very slim.  Others generally have the Tories with a double-digit lead.  Indeed, on the weekend three of the cohort – Deltapoll, YouGov and Opinium – gave the Tories 15%, 17% and 16% leads respectively in their latest surveys (carried out late last week) which would give Boris around a 140-seat majority.  Lib-Dems might also be concerned as the Deltapoll survey trimmed 5% off their support.

Asia is trading up today on trade optimism, but US and European futures are fairly muted
Johnson & Johnson (+3.0%) gets a shot-in-the-arm as judge trims $107million off opioid penalty
Applied Materials(+9.0%) chips in quarterly revenues and profits well above analyst estimates
Trump comments on healthcare pricing allows the sector to post a vigorous 2.2% gain on Friday
HP (+0.3%) directors issue carbon copy replies in rejecting Xerox’s $22-a-share take-over offer

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +8.76 (+0.66%) at 1,332 (YTD: 22.96%; 5YR: 53.8%)
MSCI AC World Equities (USD) up +75.01 (+0.78%) at 9,638 (YTD: 24.02%; 5YR: 49.7%)
Barclays Global Aggregate Bonds up +0.48 (+0.10%) at 508 (YTD: 6.07%; 5YR: 10.8%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +23.83 (+0.77%) at 3,120 (YTD: 24.48%; 5YR: 52.1%)    
NASDAQ up +61.81 (+0.73%) at 8,541 (YTD: 28.72%; 5YR: 81.6%)    
Euro STOXX 50 up +22.80 (+0.62%) at 3,712 (YTD: 23.66%; 5YR: 18.9%)    
FTSE 100 up +10.18 (+0.14%) at 7,303 (YTD: 8.54%; 5YR: 8.9%)    
CAC up +38.19 (+0.65%) at 5,939 (YTD: 25.55%; 5YR: 39.3%)    
DAX up +61.52 (+0.47%) at 13,242 (YTD: 25.41%; 5YR: 40.0%)    
Nikkei 225  up +113.44 (+0.49%) at 23,417 (YTD: 17.00%; 5YR: 35.0%)    
Hang Seng up +361.25 (+1.37%) at 26,688 (YTD: 3.26%; 5YR: 13.4%)    
MSCI Emerging Markets up +6.54 (+0.63%) at 1,049 (YTD: 8.60%; 5YR: 6.1%)    
    
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 up +0.01 at 1.84 (began the year at 2.68; 5 years ago it was 2.32)    
UK 10 Year up +0.02 at 0.73 (began the year at 1.28; 5 years ago it was 2.12)    
Germany 10 Year up +0.01 at -0.33 (began the year at 0.24; 5 years ago it was 0.80)    
France 10 Year up +0.01 at -0.02 (began the year at 0.70; 5 years ago it was 1.15)    
Italy 10 Year up +0.01 at 1.24 (began the year at 2.74; 5 years ago it was 2.32)    
Japan 10 Year down -0.01 at -0.09 (began the year at -0.01; 5 years ago it was 0.51)    
Barclays EM Basket down 0.00 at 5.47 (began the year at 6.22; 5 years ago it was 5.15)
    
Selected Currencies    
$ weakened -0.0009 versus € (-0.08%) at 1.1063 ($: YTD: 3.40%; 5YR: 11.7%)    
€ weakened -0.0030 versus £ (+0.26%) at 1.1707 (€: YTD: -4.93%; 5YR: 6.7%)    
$ weakened -0.0042 versus £ (-0.33%) at 1.2951 ($: YTD: -1.61%; 5YR: 17.2%)    
¥ weakened -0.1300 versus $ (-0.12%) at 108.9100 (¥: YTD: -0.69%; 5YR: 7.2%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.41 (-0.64%) at 63.52 (YTD: 19.47%; 5YR: -17.4%)    
WTI Crude ($/bbl) up +0.95 (+1.67%) at 57.72 (YTD: 27.11%; 5YR: -23.9%)    
Gold ($/ozt) down -4.72 (-0.32%) at 1463.58 (YTD: 14.12%; 5YR: 22.3%)    
Copper ($/mt) up +37.00 (+0.64%) at 5849.00 (YTD: -1.94%; 5YR: -12.8%)    
    
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