Fisher Investments recaps the biggest market, political and economic news from last week, including US Q3 GDP, US, eurozone and UK Purchasing Managers’ Indexes (PMIs) and Japan’s October imports and exports.
Global equities declined while the UK began rolling out its COVID-19 vaccination program and UK-EU post-Brexit trade talks continued ahead of a year-end deadline. In the US, data were light. November core consumer prices (excluding food and energy) rose 1.6% y/y, in line with expectations. Initial jobless claims increased to 853,000 in the week ending December 5, higher than consensus estimates.
In the eurozone, the third estimate of Q3 2020 GDP was revised slightly downward to 12.5% q/q from the previous reading of 12.6% q/q. The European Central Bank left interest rates unchanged but expanded its bond-buying program and announced a new batch of supportive loans for banks. In the UK, October industrial production rose 1.3% m/m but declined 5.5% y/y. October exports fell 3.6% m/m while imports rose 1.2% m/m. On Tuesday, the UK and EU made a key agreement regarding the Irish border, which removed some uncertainty over what a potential no-deal Brexit would look like. However, trade negotiations are ongoing as disagreements remain in areas such as fishing rights and dispute resolution. Whether the UK and EU reach a deal or not, investors have been weighing no-deal Brexit fears for more than four years now. In our view, whatever reality emerges is likely to be better than the worst-case scenarios many have imagined. For more insight on Brexit trade negotiations, please see our 12/08/2020 commentary, “Today in Brexit, Day 1,628.”
In Japan, the second estimate of Q3 2020 GDP was revised up to 5.3% q/q from an initial 5.0% q/q reading. November bank lending rose 6.3% y/y. In China, November consumer prices declined 0.5% y/y, following October’s 0.5% y/y rise. November exports and imports rose 21.1% y/y and 4.5% y/y, respectively. November money supply (M2) and outstanding loans increased 10.7% y/y and 12.8% y/y, respectively.
The Week Ahead
The US, eurozone, UK and Japan report December Purchasing Managers’ Indexes (PMIs). The US also releases November retail sales and industrial production data. The eurozone reports November inflation and October industrial production and trade figures. The UK posts November inflation and retail sales along with the October unemployment rate. Japan announces October industrial production and retail sales as well as November inflation and preliminary trade data. China reports November retail sales, industrial production and unemployment. The Federal Reserve, Bank of England and Bank of Japan meet to set their 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.