Weekly Wrap-Up

Last Week In Markets: Jan 15 - Jan 19, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US government funding negotiations, eurozone trade figures and Chinese GDP.

Global equity markets rose in a light week for economic data releases.

US economic data were sparse. December industrial and manufacturing production rose 3.6% y/y and 2.4% y/y, respectively. December housing starts missed expectations, falling 8.2% m/m. Despite December’s temporary drag, for the full year housing starts were still up 2.4% from a year ago. In politics, a temporary spending bill Congress passed in late December expires Friday at midnight. The House of Representatives passed a bill extending funding through February 16 late Thursday night. As of this writing, the Senate is expected to vote on the bill late Friday. Regardless of the outcome, a partial government shutdown is not inherently bad for stocks. The government has shut down before—for several weeks at times—without derailing America’s private sector-led economy. Further, the possibility of a shutdown has loomed for some time, limiting market surprise potential. (For more on partial government shutdowns, see our 1/19/2018 MarketMinder article, “Don’t Sweat the Shutdown Stunt.”)

In the eurozone, exports of goods increased 7.7% y/y in November, while imports rose 7.3% y/y. December eurozone and UK core consumer prices (excluding energy and food) rose 0.9% y/y and 2.5% y/y, respectively. December UK retail sales rose 1.4% y/y, missing expectations of 3.0% y/y.

Economic data in Asia were mostly positive. Q4 2017 Chinese GDP expanded 6.8% y/y, ahead of forecasts. December retail sales increased 9.4% y/y and industrial production rose 6.2% y/y, beating estimates. In Japan, November industrial production grew 0.5% m/m, slightly below expectations.

The Week Ahead:

The US announces January Markit manufacturing and services Flash Purchasing Managers’ Indexes (PMIs), the December Leading Economic Index (LEI) and the first estimate of Q4 2017 GDP. The eurozone also releases Markit manufacturing and services Flash PMIs, while the UK releases its first estimate of Q4 2017 GDP. In Germany, delegates from the Social Democratic Party vote Sunday on whether to proceed with negotiations that would renew an alliance with Chancellor Angela Merkel’s Christian Democratic Union. Japan will announce December inflation data and the Flash Nikkei manufacturing PMI.

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.