Wrap up – last week

Chinese foreign direct investment falls for the first time in more than two years; Irish economy contracts sharply, North Korean leader Kim Jong-il dies

In the UK, November consumer price inflation slowed to 4.8% annualised, although it was still the highest in the EU. The number of unemployed rose to its highest level in 17 years in the three months to October with 2.638 million people without a job, although the unemployment rate managed to hold steady at 8.3%. The Spanish treasury saw a successful sale of government bonds on Thursday – budget cuts have eased investors’ concerns and yields fell for both five and ten-year issues. Weaker private consumption and domestic investments caused Ireland’s economy to contract sharply in Q3, falling 1.9% quarter-onquarter compared to a rise of 1.4% in the previous quarter.

In the US, weekly new initial jobless claims fell for the second consecutive week to a three-year low, while November industrial production slipped 0.2%, missing economists’ forecasts of a 0.1% rise. Consumer inflation was flat in November – a sharp fall in petrol prices and cheaper household energy offset the rising costs of food, clothing, rents and medical care.

In signs that the nation’s economic growth could be slowing further, China saw its first year-on-year drop in foreign direct investment in 28 months while the HSBC flash manufacturing PMI (purchasing managers index) showed factory activity shrank again in December. Kim Jong-un will replace his father, Kim Jong-il, as the leader of North Korea; markets are nervous over the future of the isolated state, as its collapsing economy and aspirations to become a nuclear weapons power pose major threats to North East Asia.

Shaping the markets – this week

Third quarter gross domestic product (GDP) final estimates for the UK, US, France and Italy

Tuesday may reveal another decline in Japanese exports in November from deteriorating general external demand. On Wednesday Italy’s economy is expected to have contracted in Q3 from a sharp fall in industrial production and industrial orders in September.

French consumption is expected to rebound in November due to an increase in energy consumption as winter finally kicks-in and consumer confidence stabilises.

On Thursday, the final estimate of UK Q3 GDP will likely remain unchanged at 0.5% q-o-q. Meanwhile US Q3 GDP is expected to be revised down from an earlier estimate of 2% annualised due to slower real consumer spending growth.

Finally, Friday sees the release of the final estimate for France’s Q3 GDP as well as US November new home sales and durable goods orders, both of which are expected to rise.

Markets in numbers

World equities

Index

% 1W

% YTD

S&P 500 Composite

1219.66

-2.8

-3.0

Dow Jones Industrials

11866.39

-2.6

2.5

NASDAQ Composite

2555.33

-3.5

-3.7

FTSE 100

5387.34

-2.6

-8.7

Euro STOXX 600

233.71

-2.8

-15.3

Nikkei 225

8401.72

-1.6

-17.9

Hang Seng

18285.39

-1.6

-20.6

Benchmark government bonds

Yield

1W /bp

YTD /bp

US Treasury – 10 year

1.86

-20.0

-145.4

UK Gilt – 10 year

2.05

-11.6

-145.8

German Bund – 10 year

1.89

-17.1

-99.9

Japanese JGB – 10 year

0.99

-3.1

-13.5

Credit indices

Yield

1W /bp

YTD /bp

IBOXX £ Non-gilts All maturities

5.02

-9.8

-25.9

ITRAXX Crossover 5 Year (MID)*

777.06

14.5

N/A

Volatility index

Index

% 1W

% YTD

CBOE PX Volatility – VIX index

24.29

-7.9

36.9

Commodities

Index

% 1W

% YTD

Brent Oil ($/Barrel)

104.95

-2.8

13.1

Gold Bullion $/ Troy Oz

1593.94

-7.1

12.4

Currencies

vs $

vs £

 

¥

77.71

120.7

$

1.55

Euro

1.304

1.191

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

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.