Weekly Wrap-Up

Last Week In Markets: Dec 31 2018 - Jan 4, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including US unemployment data, Eurozone loan growth and Chinese PMI numbers.

US economic data were mostly positive. The final December Markit manufacturing and services Purchasing Managers’ Indexes (PMIs) came in at 53.8 and 54.4, respectively—both readings indicating expansion. The December ISM manufacturing PMI fell to 54.1, missing estimates, however still indicating growth. December nonfarm payrolls increased 312,000, handily beating expectations, and November’s reading was revised up from 155,000 to 176,000. The unemployment rate rose slightly to 3.9%, higher than forecast.

In the eurozone, the final December Markit manufacturing and services PMIs came in at 51.4 and 51.2, respectively, indicating expansion. November loan growth increased 3.3% y/y, while December core consumer prices (excluding energy, food, alcohol and tobacco) increased 1.0% y/y as expected. In the UK, the December Markit/CIPS UK manufacturing and services PMIs rose to 54.2 and 51.2, beating estimates.

In China, the December Caixan services PMI rose to 53.9, indicating growth, while the manufacturing PMI unexpectedly fell to 49.7, indicating contraction. While many headlines attributed the slowdown to the trade dispute between the US and China, we believe the primary headwind is tied to China’s crackdown on shadow banking, which reduced available capital to many small businesses. In our view, the broader data and comments from business leaders imply an economic collapse remains more fiction than reality. For more, please see our 1/4/2019 commentary “The Return of the Chinese Hard-Landing Ghost Story.” In Japan, the final December Nikkei manufacturing PMI rose to 52.6, beating expectations.

The Week Ahead:

The US releases November trade data, December inflation and non-manufacturing PMI. The eurozone releases November retail sales, the unemployment rate and its third reading of Q3 2018 GDP. The UK reports November industrial production and trade figures. China announces November inflation data and Japan releases the December Nikkei services PMI.

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.