Fisher Investments recaps the biggest market, political and economic news from last week, including US unemployment rate, the eurozone’s Q4 2020 GDP estimate, and UK Purchasing Manager’s Index (PMI) figures.
In the US, the January Markit Manufacturing and Services Purchasing Managers’ Indexes (PMIs) came in at 59.2 and 58.3, respectively—both beating expectations. December imports and exports rose 1.5% m/m and 3.4% m/m, respectively. January nonfarm payrolls expanded by 49,000, less than the 100,000 expected. The January unemployment rate fell to 6.3%, better than the consensus forecast for it to remain at 6.7%. On the political front, both chambers of Congress narrowly passed a budget resolution to initiate consideration of President Biden’s proposed $1.9 trillion COVID relief package. However, we anticipate passing COVID relief through the budget reconciliation process isn’t quite as simple as some new coverage suggests and any final bill is likely watered down from initial proposals. In our view, as Congress struggles to pass an arguably less-contentious bill like COVID relief, the lower likelihood of other more controversial ideas becoming law should become clearer. For additional commentary, please see our 2/3/2021 article: “More on Biden’s COVID Relief Plan and Gridlock.”
In the eurozone, the first estimate of Q4 2020 GDP was -5.1% y/y, slightly better than estimates. January Markit Manufacturing and Services PMIs increased to 54.8 and 45.4, both surpassing expectations. December retail sales rose 0.6% y/y and 2.0% m/m, exceeding consensus forecasts. December’s unemployment rate remained unchanged at 8.3%. In the UK, the January Markit/CIPS Manufacturing and Services PMIs rose to 54.1 and 39.5 respectively, with manufacturing faring slightly better than expected while services remained weak. Additionally, the Bank of England left interest rates and asset purchases unchanged, in line with expectations.
In Japan, the January Jibun Bank Manufacturing PMI fell to 49.8, slightly less than estimates. The Jibun Bank January Services PMI decreased to 46.1, worse than forecast. In China, the January Caixin Manufacturing and Services PMIs fell to 51.5 and 52.0, respectively—both missing expectations.
The Week Ahead:
The US releases January inflation data. The UK reports its first estimate of Q4 2020 GDP as well as December industrial production and trade figures. Japan announces January bank lending while China releases January inflation 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 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.