Weekly Wrap-Up

Last Week In Markets: Feb 17 - Feb 21, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including the US LEI, UK and eurozone LEIs, and Japanese GDP.

Global equities fell in the US-holiday shortened week as Covid-19 coronavirus concerns continue to weigh on markets. In the US, the Conference Board’s January Leading Economic Index (LEI) increased 0.8% m/m, surpassing expectations. The February Markit manufacturing and services flash Purchasing Managers’ Indexes (PMIs) came in at 50.8 and 49.4 respectively, both missing expectations. Readings above 50 indicate expansion.

In the UK, January core consumer prices (excluding food and energy) increased 1.6% y/y. January retail sales increased 0.8% y/y, beating expectations. The February CIPS manufacturing PMI rose to 51.9 and the services flash PMI fell slightly to 53.3. In the eurozone, February Markit manufacturing and services flash PMIs rose to 49.1 and 52.8, respectively, both beating forecasts. January core consumer prices grew 1.1% y/y.

In China, January loan growth increased 12.1% y/y while money supply (M1) remained unchanged from December. In Japan, January exports and imports decreased 2.6% and 3.6% y/y. December industrial production also decreased 3.1% y/y, modestly missing consensus expectations. Preliminary Q4 2019 GDP decreased 6.3% q/q, substantially missing analyst forecasts. Although Japanese GDP was expected to contract in Q4, the magnitude was a surprise to many. Some even interpreted the worse-than-expected reading as a sign the Japanese economy is particularly vulnerable to the recent coronavirus outbreak and may lead to a recession. In our view, stocks have mostly moved on from the virus and a weak Japanese economy is nothing new. However, there are some interesting details suggesting a sales tax enacted October 1, 2019 may be affecting demand for goods and services in the country. For more, please see our 2/18/2020 article, “Japan’s Sales-Tax Return.”

The Week Ahead:

The US reports the second reading of Q4 2019 GDP and the eurozone posts January money supply data. Japan releases January trade data, industrial production, retail sales and the final reading of the Conference Board’s Leading Economic Index (LEI). China announces February manufacturing and services PMIs.

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.