Global stocks fell amid rising geopolitical tensions with North Korea.
US economic data releases were light. July inflation (core CPI) grew 1.7% y/y, in line with forecasts. June wholesale inventories and trade both increased by 0.7% m/m, beating expectations. In geopolitics, President Trump and North Korean state media exchanged barbs, with North Korea reporting it is considering a preemptive attack on US territory, Guam. In our view, while markets may react negatively in the short term, absent material escalation, there is likely little long-term market impact. Despite years of North Korean threats, missile tests and border incidents none have materially threatened global markets. (For more on North Korea, please see our August 10 MarketMinder.com article, Stocks’ Calm Isn’t Irrational.)
In the eurozone, July German inflation rose 1.7% y/y, in line with expectations. In France, June industrial production fell 2.6% y/y, while manufacturing production remained flat at 3.3% y/y. In the UK, June industrial production increased 0.3% y/y, beating expectations, and manufacturing production increased 0.6% y/y, slightly missing expectations. June construction output increased 0.9% y/y.
In Asia, Taiwanese exports beat expectations, rising 12.5% y/y, despite tech related exports (~45% of total exports) decelerating from the prior month. In China, July imports and exports slowed—by 11.0% y/y and 7.2% y/y, respectively. July headline inflation decelerated to 1.4% y/y. In Japan, July bank loans remained flat at 3.3% y/y. June core machinery orders missed expectations, falling 1.9% m/m, but accelerating from May.
The US releases July trade, housing, industrial and manufacturing production data. The UK reports July inflation, producer prices, and retail sales figures. The eurozone reports inflation and trade data. Japan releases industrial production, retail sales and trade data. China releases its report on July foreign direct investment.
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.