Global equities ended the week flat amid fears of contagion from Turkey’s lira decline. US economic data were light. July retail sales rose 6.4% y/y, beating expectations. July industrial production increased 4.2% y/y and manufacturing production rose 2.8% y/y.
European data releases were mostly positive. In the eurozone, the second estimate of Q2 2018 GDP was reported up 2.2% y/y, above the initial estimate. July core consumer prices (excluding food and energy) rose 1.1% y/y. June industrial production increased 2.5% y/y. June exports and imports rose 5.7% y/y and 8.6% y/y, respectively. In the UK, July retail sales increased 3.5% y/y, better than forecast. July core consumer prices (excluding food, energy, alcohol and tobacco) rose 1.9% y/y.
In Asia, China’s July retail sales rose 8.8% y/y and industrial production increased 6.0% y/y, both lower than estimates. July outstanding loan growth rose 13.2% y/y, higher than forecast—which was a positive surprise. In Japan, June industrial production fell 0.9% y/y. July exports rose 3.9%, far behind expectations, while imports rose 14.6%, beating expectations. In emerging markets, Turkey’s lira dropped tied to President Erdogan’s continuing power consolidation, the central bank’s monetary policy approach and the Trump administration’s threatened tariff increases. Despite fears of contagion, Turkey’s problems likely remain isolated to that country in our view. For more, please see our 08/15/2018 commentary, “Scaling the Real Impact of the Turkish Lira Meltdown.”
The US and eurozone data releases include manufacturing and services Flash Purchasing Managers’ Indexes. Japan releases core inflation and Leading Economic Index data.
Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.