BEMO MONTHLY BULLETIN I EQUITY MARKETS

Transcription

1 BEMO MONTHLY BULLETIN I EQUITY MARKETS U.S equities started the month with markets rising on hopes of a US-China trade agreement following the G20 summit abolishing duties on U.S. cars. However early gains were quickly reversed as Beijing contradicted Trump s comment. As the monetary policy took center stage, investors remained wary of a hawkish Fed stance and added pressure on the equity market. The Fed increased rates by 25 basis points but opted for a more dovish tone with two additional hikes instead of three in the coming year. As monetary and trade policies weighed on the markets, the budget policy and resulting government shutdown in the US with Trump s promise to Last for a very long time sent GLOBAL EQUITY BENCHMARK INDICES Last Price MTD % YTD % 30D Vol World % 0.00% 2.34% Developed % 0.00% 3.08% Emerging % 0.00% -2.03% Frontier % 0.00% -0.72% Europe % 0.00% 6.08% Latin America % 0.00% -3.79% Asia Pacific % 0.00% 0.94% Last Price MTD % YTD % 30D Vol EuroStoxx % 0.00% 5.50% FTSE % 0.00% 6.22% CAC % 0.00% 5.08% DAX % 0.00% 4.64% Swiss SMI % 0.00% 9.46% Nikkei % 0.00% 5.52% CSI % 0.00% -4.41% S&P Indices INTERNATIONAL EQUITY INDICES Last Price MTD % YTD % 30D Vol S&P % 0.00% 5.96% S&P Value % 0.00% 6.78% S&P Growth % 0.00% 4.79% Sectors Indices S&P 500 IN FOCUS Discretionary % 0.00% 5.29% Staples % 0.00% 6.55% Energy % 0.00% 5.63% Financials % 0.00% 5.07% Healthcare % 0.00% 6.39% Industrials % 0.00% 6.92% IT % 0.00% 2.97% Materials % 0.00% 3.67% Telecom % 0.00% 1.11% Utilities % 0.00% 4.05% Real Estate % 0.00% 7.75% stocks tumbling. In the EU, markets were pressured by negative Brexit developments with Prime Minister May postponing the vote on her withdrawal agreement. Furthermore, the release of economic data pressured global markets lower, as disappointing Chinese and Eurozone figures alluded to a slowdown. The European Central Bank notably trimmed its growth forecast for the year ahead. DEVELOPED VS EMERGING - MONTH TO DATE EMERGING DEVELOPED INTERNATIONAL EQUITY - MONTH TO DATE CAC 40 FTSE 100 DAX NIKKEI 225 VALUE GROWTH S&P 500 SUPPORT & RESISTANCE S&P VALUE VS GROWTH

2 BEMO MONTHLY BULLETIN I FOREIGN EXCHANGE The dollar ended lower in a volatile month, notably pressured after the Federal Reserve signaled fewer interest rate hikes over the next two years. Dollar focus remains on the government shutdown as well as trade developments. The British pound fell sharply in December. Brexit developments took the focal interest of investors with sterling falling as Prime Minister May deferred the vote on her Brexit agreement while also facing increasingly dissatisfied members of Parliament from both parties, ultimately culminating in challenge to her leadership. A recovery ensued as Prime Minister May survived the vote of no-confidence, but remained markedly lower than last month s levels. Focus FOREIGN EXCHANGE PERFORMANCE Major Indices Last Price MTD % 30D Vol 25 RR USD Index % -0.03% - EUR/USD % -0.02% USD/JPY % 0.04% GBP/USD % -0.37% USD/CAD % -0.41% AUD/USD % -0.26% NZD/USD % -0.32% USD/CHF % 0.00% USD/NOK % -0.19% USD/SEK % 0.02% USD/CNY % 0.13% Major EUR Cross Rate EUR/GBP % -0.34% EUR/CHF % -0.04% EUR/JPY % -0.01% DISTANCE FROM 52 WEEKS LOW/HIGH remains on Mid January when voting is scheduled to take place. The Japanese yen was among the best performing G-10 currencies in December as investors flocked to the safe-haven amidst broad political uncertainty and significant losses in the stock market. The Japanese yen fell to the 110 levels against the USD, not seen since early September. The euro remained range bound around 1.13 before ending higher. The release of economic figures for France and Germany disappointed investors. Italy reaching a deal with the European Commission on its revised 2019 fiscal budget deficit provided additional support, as did some weakness in the dollar. EUR/USD 1 MONTH SUPPORT & RESISTANCE GBP/USD 1 MONTH SUPPORT & RESISTANCE USD/JPY 1 MONTH SUPPORT & RESISTANCE USD/CAD 1 MONTH SUPPORT & RESISTANCE

3 BEMO MONTHLY BULLETIN I FIXED INCOME U.S. Treasuries gradually strengthened with yields falling below the 2.8% level for the first time since late May. Yields fell in tandem with losses in global equity markets. Yields notably fell as the Federal Reserve hinted for lower projection of rate hikes for next year. They were also pressured lower by some disappointing economic data before the U.S. government s shutdown kept their prices on the rise. Yields on German government bonds similarly fell with increasing demand for safety in the face of disappointing economic data and sharp losses in European and global stock markets. Britain s gilts ended relatively flat as Prime Minister May held on to her as Prime Minister. The Bank of England holding rates at their current levels and Benchmark Indices GLOBAL BOND INDICES Yield Yield (in Bps) US 10 Years Benchmark EU 10 Years Benchmark UK 10 Years Benchmark Sovereign Bonds US Treasury Bond Eurozone Sovereign Bond U.K. Sovereign Bond Japan Sovereign Bond GDP figures remained unchanged failed to make a significant impact on gilt yields. Japanese sovereign yields were sent to negative territory, for the first time since 2017, amid a backdrop of largely stagnant inflation. US TREASURIES YIELD CURVE - 1 MONTH EUR GENERIC YIELD CURVE - 1 MONTH Corporate Bonds US Investment Grade Bond US High Yield Bond EUR Investment Grade Bond EUR High Yield Bond USD Emerging Market IG & HY OVERNIGHT RATES - SWAPS Rate Rate (in Bps) 3M USD LIBOR M EUR EURIBOR M GBP LIBOR Y USD SWAP Y USD SWAP Y USD SWAP Y USD SWAP FIXED INCOME SPREADS Spread Spread (in Bps) USD 3M vs 10Y Spread (0.3256) USD 2Y vs 10Y Spread (0.0070) USD IG Spread USD HY Spread EU vs US 10Y Spread EU vs US 2Y Spread EM vs Benchmark Spread USD CORPORATES - 1 MONTH SPREAD EU VS US - 1 MONTH SPREAD

4 BEMO MONTHLY BULLETIN I COMMODITIES GLOBAL COMMODITIES MARKET Last Price MTD % Commodity Index % Energy WTI Crude Future % Brent Crude Future % NYMEX Gasoline % NYMEX Heat Oil % ICE Gasoil % NYMEX Natural Gas % Precious Metals Gold Spot $/Oz % Silver Spot $/Oz % Platinum Spot $/Oz % Palladium Spot $/Oz % Gold Future % Silver Future % Platinum Future % Palladium Future % Base Metals LME Aluminum % LME Copper % LME Zinc % LME Nickel % LME Lead % LME Tin % Agricultural Corn CBT % Wheat CBT % Soybeans CBT % Bean Meal CBT % Rough Rice CBT % MDE Palm Oil % Soybean CBT % Coffee ICE % Sugar #11 ICE % Cotton #2 ICE % Cocoa ICE % Ethanol CME % Lumber CME % Orange Juice ICE % Live Cattle CME % Feeder Cattle CME % Lean Hogs CME % Oil price fell throughout the month, incurring heavy losses, pressured by worries over the global economic health and as losses in equity markets weighed in. A slowdown in global growth could in turn lead to weaker energy demand which coupled with continued growth in U.S. crude production as indicated by the EIA would unbalance the market with excess supply. In an effort to stem declines in oil prices, Saudi Arabia, plans to limit its output beginning early next year by 322,000 barrels a day, more than the previous announced cut of 250,000 barrels a day for six month starting in January. However, the news failed to provide significant support. Focus remains on whether the production cuts will yield any significant outcome, as well as output. The health of the global economy and growth slowdown also remain potential drivers. Gold rose in excess of 3% in the wake of the faltering equity markets while also being supported by negative political developments in the form of safehaven buying. Gold was buoyed by the ongoing Brexit uncertainty and the vote of no-confidence in British Prime Minister May while the government shutdown in the U.S as the month drew to a close helped consolidate gains. Bullion was also supported by some weakness in the U.S. dollar. Focus remains on global economic and political developments most notably in the U.S., the U.K., and China. COMMODITY INDEX SUPPORT & RESISTANCE GOLD 1 MONTH SUPPORT & RESISTANCE

5 BEMO MONTHLY BULLETIN I MARKET TRENDS KEY ASSETS TRENDS * Monthly trends are calculated based on the last two-month period CENTRAL BANKS WATCH - IMPLIED RATES PROBABILITIES FEDERAL RESERVES EUROPEAN CENTRAL BANK BANK OF ENGLAND BANK OF JAPAN FEAR BAROMETERS LOW FEAR HIGH FEAR The CS Fear Barometer measures investor sentiment for 3-month investment horizons by pricing a zero-cost collar. The higher the level, the greater the fear. LOW VOLATILITY HIGH VOLATILITY The Chicago Board Options Exchange Volatility Index reflects a market estimate of future volatility, based on the weighted average of the implied volatilities for a wide range of strikes.

6 DAILY MARKETS BRIEF I ECONOMIC DATA KEY ECONOMIC INDICATORS Country Event Date Canada Bank of Canada Rate Decision 1/9/ :00 Canada CPI YoY 1/18/ :30 China CPI YoY 1/10/2019 4:00 China GDP YoY 1/21/2019 4:00 Eurozone ECB Main Refinancing Rate 1/24/ :45 Eurozone CPI YoY 1/17/ :00 France Markit France Manufacturing PMI 1/2/ :50 France Markit France Manufacturing PMI 1/24/ :15 France Markit France Manufacturing PMI 2/1/ :50 Germany IFO Business Climate 1/25/ :00 Germany ZEW Survey Expectations 1/22/ :00 Germany ZEW Survey Current Situation 1/22/ :00 Italy Manufacturing Confidence 1/30/ :00 Japan Industrial Production MoM 1/18/2019 6:30 Japan Industrial Production MoM 1/31/2019 1:50 Japan Jobless Rate 2/1/2019 1:30 Japan BoP Current Account Balance 1/11/2019 1:50 United Kingdom CPI YoY 1/16/ :30 United States Change in Nonfarm Payrolls 1/4/ :30 United States Change in Nonfarm Payrolls 2/1/ :30 United States FOMC Rate Decision (Upper Bound) 1/30/ :00 United States GDP Annualized QoQ 1/30/ :30 United States CPI MoM 1/11/ :30 United States ISM Manufacturing 1/3/ :00 United States ISM Manufacturing 2/1/ :00 Banque BEMO sal Wealth & Investment Management research@bemobank.com Head Office - Private and Corporate Banking 96 Pasteur Building, Pasteur Street, Medawar Area, P.O. Box: , Beirut - Lebanon Tel: Fax: General Management Beirut Central District Riad El Solh Square, Esseily Building Bloc A, 7th Floor Beirut - Lebanon Tel: Fax: Disclaimer: This report is published for information purposes only. The information herein has been compiled from, or based upon sources considered to be reliable (Bloomberg, SeekingAlpha, DailyStar ), but we do not guarantee or assume responsibility for its completeness and accuracy. This document should not be construed as a solicitation to take part in any investment, or as constituting any representation or warranty on our part. This report is not to be relied upon in substitution for the exercise of specialists. We may not have taken any steps to ensure that the securities referred to in this report are suitable for any particular investor. The investments and services contained or referred to herein are not purported to be exhaustive, any person considering an investment should seek specialist advice on the suitability of an investment. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation. Clients understand that it is their responsibility to seek legal and/or tax advice regarding the legal and tax consequences of their investment transactions. The consequences of any action taken on the basis of information contained herein are solely the responsibility of the recipient. Investment instruments are subject to risk, including possible loss of principal amount invested. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments. Some investments mentioned in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realized. Some investments may not be readily realizable and it may be difficult to sell or realize those investments, similarly it may prove difficult to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of websites or references. We have not reviewed any such site and takes no responsibility for the content contained therein. Such address or reference is provided solely for convenience and information. Accessing such website through this report shall be at the recipients own risk.