Fisher Investments recaps the biggest market, political and economic news from last week, including US, UK, eurozone, Chinese and Japanese Purchasing Managers’ Index (PMI) figures, US unemployment data and eurozone retail sales figures.
Global equities rose amid heightened political tension in the US. A preview of the Investment Policy Committee’s 2020 recap and 2021 forecast will be sent to you in the Q4 2020 Executive Summary next week.
In the US, the final December Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 57.1, better than expected. The December Services PMI fell to 54.8, missing estimates but still signaling expansion (readings above 50 indicate expansion). December nonfarm payrolls decreased by 140,000. While this is the first drop in employment since April, it doesn’t appear to have surprised stocks much, likely since job losses—particularly in the leisure and hospitality industries—have been expected due to the reinstated partial lockdowns in various cities and states. The December unemployment rate remained unchanged at 6.7%, better than the 6.8% forecasted. The Associated Press and other major news organizations called the two Senate runoff elections held in Georgia on Tuesday for both Democratic candidates. With Democrats flipping both seats, they take nominal control of a 50-50 Senate where Vice President-elect Kamala Harris would provide the tie-breaking vote. However, Biden will begin his presidency with the weakest Democratic control of Congress for a new Democratic president since Grover Cleveland in 1885. Slim majorities in both congressional chambers likely make it difficult to pass sweeping new laws, which should give stocks one less thing to worry about. For more on US politics, please see our 1/7/2021 commentary, “The Dangers of Partisan Bias Now.”
In the eurozone, November retail sales fell 6.1% m/m and 2.9% y/y, less than forecast. The December Markit Manufacturing PMI rose to 55.2, missing expectations, while the December Markit Services PMI rose to 46.4, beating expectations. The November unemployment rate fell slightly to 8.3%. The UK December Markit/CIPS Manufacturing PMI was 57.5, better than forecast, while the Services PMI was 49.4, lower than estimates. November money supply (M4) grew 0.8% m/m.
In Japan, the December Jibun Bank Manufacturing and Services PMIs were 50.0 and 47.7, both beating expectations. In China, the December Markit/Caixin Manufacturing and Services PMIs were 53.0 and 56.3, respectively, missing expectations.
The Week Ahead
The US and UK release December retail sales and inflation. The UK also reports November industrial production and trade data. The eurozone reports December inflation as well as November industrial production and trade figures. China announces December money supply, inflation and trade 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.