Wrap up – last week

Improved picture in US eclipsed by eurozone woes

Equity markets slid last week on intensifying concerns surrounding the eurozone economies. Yields on Spanish and Italian bonds hovered well above 6% and even countries such as France and the Netherlands were showing signs of stress as spreads over German bunds climbed sharply. Germany’s refusal to countenance a greater role for the European Central Bank appeared to harden and growing talk of a financial transactions tax for Europe riled the UK, given that most of it would be raised in London. Newly installed technocrat cabinets in Italy and Greece appeared to do little to placate markets.

Elsewhere, there was concern that Chinese residential property price declines were gaining momentum as 38 cities reported price falls in October, up from 24 in September. The US, in contrast, was a beacon of hope as retail sales rose 0.5% month-on-month in October and unemployment insurance benefit claimants fell to 3.6 million — their lowest since September 2008. The WTI oil price climbed as the reversal of a pipeline flow should alleviate the glut of stocks around Cushing, Texas, the delivery point for WTI crude oil. Brent crude oil, in contrast, was more affected by global economic concerns and dipped back below US$110 a barrel by the end of the week, narrowing the spread between the two price points.

Shaping the markets – this week

US politicking takes centre stage as supercommittee deadline approaches to agree budget cuts

It is a shortened trading week for US markets with the Thanksgiving holiday on Thursday. Ahead of that, the US supercommittee, a panel of 12 lawmakers drawn from both sides of Congress, is supposed to agree US$1.2 trillion of future deficit reductions by 23 November, otherwise automatic federal spending cuts are triggered at the start of 2013. On Tuesday, US Q3 gross domestic product (GDP) is expected to be revised down from 2.5% to 2.4% (annualised), although lower stock building and a narrower external gap should point to a healthier mix. On Wednesday, the University of Michigan Consumer Sentiment index is expected to climb slightly from 64.2.

Elsewhere, on Tuesday, Hong Kong consumer price index (CPI) inflation may jump above 6% in October as rent waivers fall out of the figures. On the same day the UK reports its public borrowing figures for October, which should confirm that it is still on course to borrow less this year than last. Wednesday sees the November release of the eurozone composite Purchasing Managers Index, which is likely to dip below 46.5 and on Thursday a declining ifo business climate index in Germany is anticipated to show that weakness in Europe is afflicting the core. On Friday, Japan is expected to confirm that core CPI remains in deflationary territory, whilst Singapore’s industrial production for October is expected to moderate from the 12.8% year-on-year expansion recorded for September.

Markets in numbers

World equities

Index

% 1W

% YTD

S&P 500 Composite

1215.65

-3.8

-3.3

Dow Jones Industrials

11796.16

-2.9

1.9

NASDAQ Composite

2572.50

-4.0

-3.0

FTSE 100

5362.94

-3.3

-9.1

Euro STOXX 600

232.17

-3.7

-15.8

Nikkei 225

8374.91

-1.6

-18.1

Hang Seng

18491.23

-3.4

-19.7

Benchmark government bonds

Yield

1W /bp

YTD /bp

US Treasury – 10 year

2.01

-5.5

-129.6

UK Gilt – 10 year

2.26

-3.5

-125.0

German Bund – 10 year

1.94

10.7

-94.8

Japanese JGB – 10 year

0.94

-2.5

-17.6

Credit indices

Yield

1W /bp

YTD /bp

IBOXX £ Non-gilts All maturities

5.05

9.0

-23.4

ITRAXX Crossover 5 Year (MID)*

757.65

14.6

N/A

Volatility index

Index

% 1W

% YTD

CBOE PX Volatility – VIX index

32.00

6.5

80.3

Commodities

Index

% 1W

% YTD

Brent Oil ($/Barrel)

108.80

-5.0

17.2

Gold Bullion $/ Troy Oz

1724.40

-2.9

21.6

Currencies

vs $

vs £

 

¥

76.90

121.4

$

1.58

Euro

1.352

1.169

Source: Datastream. * Spread in basis points. Past performance is not a guide to future performance.

Source: Henderson Global Investors

Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the United Kingdom  Financial Services Authority) provide investment products and services.

The Henderson Horizon Fund (the Fund) is a Luxembourg SICAV incorporated on 30 May 1985 and regulated by the Luxembourg Financial Services Regulatory Authority.

Atlas JMFS Investments Services Limited (Atlas JMFS) is the Representative in Malta of Henderson Global Investors. Henderson Horizon Fund is authorised to be marketed in Malta in line with the UCITS Directive. Atlas JMFS Investments Services Limited (IS30176), 67 Level 3 South Street, Valletta, Malta is licensed to conduct investment services business by the MFSA, Notabile Road, Attard BKR3000, Malta, and is a member firm of the Malta Stock Exchange, Garrison Chapel, Castile Place, Valletta VLT1063, Malta.

The sub-funds of the Henderson Horizon Funds which have been authorised to be marketed in Malta are eight equity funds and one bond fund.

Investors should remember that the value of investments and any income derived can go down as well as up and past performance is no guarantee to future performance. Any investment decision must be made solely on the basis of the information contained in the prospectus, which is available on request from Henderson Global Investors and may be obtained from the local representative Atlas JMFS.