Fisher Investments recaps the biggest market, political and economic news from last week, including US GDP growth, Markit Purchasing Manager’s Indexes and Japanese inflation data.
Global equities rose 1.3% amid headlines focused on impeachment proceedings in Washington D.C. Although this will likely continue to dominate various media for some time, we believe it is too early for investors to take any action. For more, please see our 12/18/2019 MarketMinder article, “Impeachment: Big Political Drama, Likely Little Market Impact.”
In the US, the preliminary December Markit services Purchasing Managers’ Index (PMI) rose to 52.2, while the manufacturing PMI fell slightly to 52.5 (readings above 50 indicate expansion). The third estimate of Q3 2019 GDP was revised up to 2.1% y/y, in line with expectations. The Conference Board’s November Leading Economic Index (LEI) reading remained unchanged from October, following three consecutive months of declines. November industrial and manufacturing production both fell 0.8% y/y, better than feared.
In the eurozone, preliminary December Markit PMI results were mixed. The services PMI increased to 52.4, beating expectations while the manufacturing PMI decreased to 45.9, below consensus estimates. In the UK, the third estimate of Q3 2019 GDP was revised up to 1.1% q/q, modestly surpassing forecasts after falling in Q2 2019. Preliminary CIPS services and manufacturing PMIs respectively fell to 49.0 and 47.4 in December, below forecasts. November 2019 retail sales rose 1.0% y/y, missing initial forecasts. Additionally, the Bank of England left interest rates unchanged at 0.75% during their December policy meeting.
In Asia, economic reports were mixed. Japanese preliminary November exports and imports decreased 7.9% y/y, and 15.7% y/y, respectively. The preliminary December Markit/JMMA manufacturing PMI declined to 48.8 while the services PMI rose slightly to 50.6. November core-core consumer prices (excluding food and energy) rose to 0.8% y/y, modestly higher than in October. The Bank of Japan announced it will keep its short-term interest rate at -0.1%. In China, November retail sales rose 8% y/y, beating forecasts. November industrial output grew 6.2% y/y, exceeding both the previous reading and initial forecasts.
The Week Ahead:
Data releases are expected to be light in the holiday-shortened week. The US releases November durable goods orders. Japan reports revised November import and export volumes, industrial production and retail sales.
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.