Weekly Wrap-Up

Last Week In Markets: Jan 06 - Jan 10, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US unemployment rate, Brexit update and Japanese December Purchasing Managers’ Index.

Global equities rose 0.6% amid heightened geopolitical tension. In the US, the December Markit services Purchasing Managers’ Index (PMI) was revised to 52.8, up from the preliminary estimate and still signaling expansion (readings above 50 indicate expansion). The December ISM non-manufacturing PMI rose to 55.0, beating expectations. The unemployment rate was unchanged at 3.5% in December—its lowest level since 1969. US-Iranian tensions remained in the spotlight as Iran launched retaliatory missile strikes on US bases in Iraq. US officials reported no casualties and President Trump urged de-escalation in a speech on Wednesday. In a related developing story, American, Canadian and UK officials believe a Ukrainian commercial jetliner was likely shot down by an Iranian missile system—potentially by mistake. While uncertainty created by regional threats and conflicts can lead to short-term volatility, they rarely affect global markets longer-term. We continue to believe these recent US-Iranian retaliatory actions lack the scale to wallop this bull market. For more, please see our 1/8/2020 commentary, “Iran-US Tensions Ratchet up: Investment Implications.

In the UK, the December Markit/CIPS services PMI was revised to 50.0, up from the preliminary estimate of 49.0. December retail sales increased 1.9% y/y. In Brexit news, Prime Minister Boris Johnson’s Withdrawal Agreement passed a final vote in the House of Commons as anticipated. The bill is also expected to clear the remaining hurdles in the process—including a vote in the European Union Parliament—within the next few weeks ahead of the planned Brexit deadline of January 31. In Europe, the December Markit services PMI was also revised upward to 52.8, slightly beating estimates. December flash core consumer prices (excluding food and energy) rose 1.3% y/y, in line with expectations. November retail sales increased 2.2% y/y, more than forecast.

In Japan, the December Jibun Bank services and manufacturing PMIs decreased to 49.4 and 48.4 respectively, both missing expectations and signaling contraction. In China, the December reading of the Markit Caixin services PMI was 52.5, missing forecasts.

The US and UK release December retail sales and consumer prices. The UK also reports November industrial production and trade figures. The eurozone announces November industrial production and trade data as well as December consumer prices. China and Japan release retail sales, while China also posts Q4 2019 GDP and December 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.