Global equities fell 5.0% amid continued market volatility and rehashed headline fears. In the US, final readings for November’s Markit services and manufacturing Purchasing Managers’ Indexes (PMIs) showed little change from previous measurements at 54.7 and 55, respectively and in healthy expansion territory. November nonfarm payrolls added 155,000 jobs—below consensus estimates. The November unemployment rate remained unchanged from October at 3.7%.
In the UK, Brexit dominated headlines as the European Court of Justice suggested the UK could unilaterally revoke their decision to leave the European Union. Separately, Parliament passed a proposal to give it control of the Brexit process if Prime Minister Theresa May’s proposed deal fails to pass. These developments provide Parliament a backup option to “no deal” if it rejects May’s plan and likely increases the chances they vote against it next week. While Brexit’s outcome remains impossible to predict, we believe that as more details become available, markets will benefit from increased clarity. In economic news, the November CIPS manufacturing PMI was revised up to 53.1, beating expectations, while the services PMI was revised down to 50.4. The third estimate of eurozone Q3 2018 GDP showed expansion of 1.6% y/y, revised slightly downward from the previous estimate but still showing economic growth. The November final Markit manufacturing and services PMIs were both modestly revised upwards to 51.8 and 53.4, respectively.
Japan released initial estimates of the October Leading Economic Index at 104.1, modestly below expectations. The final estimate of the November Nikkei manufacturing PMI was revised up to 52.2, while the services PMI was little changed from previous readings at 52.3. In November, the Chinese Caixin services PMI increased to 53.8, while the manufacturing PMI slightly increased to 50.2 over the same period.
The US announces November inflation data. The eurozone releases preliminary readings for December manufacturing and services PMIs. In Asia, Japan will report final Q3 2018 GDP figures and China releases money supply data.
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.