Weekly Wrap-Up

Last Week In Markets: Dec 14 - Dec 18 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US Conference Board’s Leading Economic Index (LEI), US, Japan, eurozone and UK Purchasing Managers’ Indexes (PMIs) and China’s Retail Sales.

In the US, the Conference Board’s Leading Economic Index (LEI) increased 0.6% m/m in November—marking the third consecutive, albeit tepid, positive month. December Flash Markit Purchasing Managers’ Indexes (PMIs) showed mixed results—the manufacturing index slightly beat expectations at 56.5 while services modestly missed at 55.3. Importantly, both remained in expansionary territory (readings above 50 indicate expansion). November retail sales increased 4.1% y/y, missing estimates. November industrial production fell 5.5% y/y but rose 0.4% m/m.

In the eurozone, December Flash Markit PMIs surpassed analyst expectations with the manufacturing index rising to 55.5 and services rising to 47.3, respectively. November core consumer prices (excluding food and energy) rose 0.2% y/y, in line with estimates. October industrial production declined 3.8% y/y but increased 2.1% m/m. In the UK, the December Flash Manufacturing and Services Markit/CIPS PMI increased to 57.3 and 49.9, respectively. Notably, eurozone and UK manufacturing figures soared to multiyear highs, likely boosted by surging demand and supplier constraints ahead of the year-end Brexit deadline. For more, see our 12/17/2020 commentary, “Flash PMIs Put a Potential No-Deal Brexit Into Perspective.” November core consumer prices fell 0.1% m/m but rose 1.1% y/y—both lower than estimates. November retail sales modestly missed expectations but increased 2.4% y/y. The Bank of England left interest rates unchanged, as expected.

In Japan, the December Jibun Bank Flash Manufacturing and Services PMIs were mostly flat from prior readings at 49.7 and 47.2, respectively. November core-core consumer prices (excluding food and energy) fell 0.3% y/y. Preliminary November exports and imports declined 4.2% y/y and 11.1% y/y, respectively. Final October retail sales reading came in at 6.4% y/y, while industrial production fell 3.0% y/y, a marked improvement from the prior -9.8% y/y reading. As expected, the Bank of Japan kept monetary policy unchanged. In China, November retail sales rose 5% y/y, in line with expectations. Industrial production rose 7% y/y in November, ahead of estimates.

The Week Ahead

The US releases the final reading of Q3 2020 GDP growth and November durable goods orders. The UK announces its final Q3 2020 GDP figures and trade data. Japan releases October’s Leading Economic Index (LEI), November retail sales and trade data.

Tip of the Week

Fisher Investments’ offices and US markets will be closed on Friday, December 25 in observance of Christmas and Friday, January 1 for New Year’s Day. We wish you and your families a safe and enjoyable holiday season!

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.