Fisher Investments recaps the biggest market, political and economic news from last week, including US and Japanese purchasing managers index (PMIs) numbers and eurozone import and export data.
In the US, the November Markit services purchasing managers’ index (PMI) increased to 51.6, as expected, while the November Markit manufacturing PMI rose to 52.6, beating expectations (PMI readings over 50 indicate expansion). The November ISM manufacturing and nonmanufacturing PMIs came in at 48.1 and 53.9, respectively. The November unemployment rate dropped to 3.5%—the lowest level since 1969. October factory orders rose 0.3% m/m—in line with expectations. In tariff news, President Trump said he will remove Argentina’s and Brazil’s waivers from steel and aluminum tariffs, threatened a 100% tariff on certain French goods and warned Chinese trade talks may drag beyond the 2020 election. While this continues to create media chatter, in our view, not much has changed. As we’ve written, we believe tariffs are ultimately a negative for growth, but by now their surprise power is gone and it is becoming increasingly clear they are nowhere near large enough to knock the bull market off course. For more, please see our 12/04/2019 MarketMinder article, “This Week's Tariff Talk Is More of the Same.”
In the eurozone, the third estimate of Q3 2019 GDP showed an increase of 1.2% y/y, in line with the previous estimate. Q3 2019 trade data were mixed: exports rose 0.4% q/q, slightly lower than expected, while imports rose 0.6% q/q, more than anticipated. The November Markit services PMI was revised up to 51.9, surpassing analysts’ expectations. The November Markit manufacturing PMI rose to 46.9, better than expected. The November CIPS services and manufacturing PMIs fell to 49.3 and 48.9, respectively—missing estimates.
In Japan, the November Nikkei services PMI rose to 50.0, up from the prior reading. The final reading of the Markit manufacturing PMI fell to 48.9—missing expectations but up from the previous estimate. In China, the November Markit/Caixin services PMI rose to 53.5, greater than expected. The November Markit/Caixin manufacturing PMI rose to 51.8, also beating expectations.
The Week Ahead:
The US announces November inflation and retail sales figures. The eurozone posts October industrial production numbers. The UK will hold a general election on Thursday and also releases October 2019 GDP and industrial and manufacturing production numbers. Japan reports its second estimate of Q3 2019 GDP, October industrial production and November retail sales. China announces November inflation and trade data. Additionally, the European Central Bank and US Federal Reserve meet to discuss and set their countries’ respective monetary policies.
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 the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.