Weekly Wrap-Up

Last Week In Markets: Feb 26 - Mar 2, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US tariff news, French GDP figures and Japanese sales data.

Global stocks ended lower amid mixed economic news.

US data were mixed. The second estimate of Q4 2017 GDP was revised down to 2.5% annualized from the initial estimate of 2.6%. The February Markit manufacturing Purchasing Managers’ Index (PMI) fell slightly to 55.3 from 55.9 in January, but still indicated expansion. The Institute of Supply Management (ISM) manufacturing PMI rose to 60.8 in February—beating expectations. January durable orders missed expectations, falling 3.7% m/m. However, durable goods orders are a volatile data series, and any single month’s tally isn’t hugely meaningful. President Trump announced he will likely impose tariffs on steel and aluminum imports next week. Targeted tariffs create winners and losers in specific industries, and while we regard tariffs as ill advised, measures like this are fairly normal and haven’t historically triggered large scale trade wars. For more analysis on tariffs, see our 03/02/2018 MarketMinder article, “Considering the Steel and Aluminum Tariffs.”

In the eurozone, data were positive. January lending to non-financial corporations and households grew 3.4% y/y and 2.9% y/y, respectively. The February Markit manufacturing PMI was revised slightly higher to 58.6 from the initial estimate—indicating expansion. The eurozone unemployment rate remained unchanged at 8.6% in January. The second estimate of French Q4 2017 GDP was revised slightly higher to 2.5% y/y. In the UK, the February Markit/CIPS manufacturing and construction PMIs posted at 55.2 and 51.4, respectively.

In Asia, data were mixed. Japan’s January industrial production fell 6.6% m/m—more than expected—but rose 2.7% y/y. January retail sales fell 1.8% m/m but rose 1.6% y/y. In China, the official February manufacturing and non-manufacturing PMI surveys, including large, state-owned firms, came in at 50.3 and 54.4, respectively—both below estimates. The February Markit/Caixin manufacturing PMI, which includes smaller businesses, rose slightly to 51.6.

The Week Ahead:

The US releases February services and non-manufacturing PMIs, employment data and trade figures. The eurozone announces the February services PMI, January retail sales and the third estimate of Q4 2017 GDP. The UK reports the February services PMI, January trade and industrial production. Japan releases the February Nikkei services PMI and the second estimate of Q4 2017 GDP. China reports the February services PMI, February trade and inflation data. The European Central Bank and Bank of Japan meet to decide their respective monetary policies. On Sunday, March 4 Italy holds a general election. Regardless of the outcome, the likely result is continued political gridlock—a fine result for markets. For more on the upcoming election, see the 1/02/2018 MarketMinder article, “What You Need to Know About Italy’s Upcoming Elections.”

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.