Global equities fell 3.4% during a volatile week. US economic releases were positive. The January ISM manufacturing Purchasing Managers’ Index (PMI) remained strong at 59.1—down slightly from 59.3 in December (readings above 50 indicate expansion). Non-farm payrolls increased by 200,000 in January, ahead of expectations. January’s unemployment rate remained unchanged at a 17-year low of 4.1% and wage growth accelerated, with average hourly earnings for private sector workers climbing 2.9% y/y. In Chairwoman Janet Yellen’s final policy meeting, and as widely expected, the Fed decided to hold target rates steady.
In the eurozone, the first estimate of Q4 2017 GDP was reported at 2.7% y/y, in line with expectations and the 19th consecutive quarter of growth. The Markit manufacturing PMI reported strong expansion in January with a reading of 59.6, in line with preliminary estimates. The December unemployment rate remained at 8.7%—the lowest level since January 2009. In the UK, the January Markit/CIPS manufacturing PMI fell, but remained expansionary, with a reading of 55.3.
In Asia, economic data were also positive. In Japan, the Nikkei manufacturing PMI accelerated to 54.8 in January—increasing for the third straight month. December retail sales beat estimates, rising 0.9% m/m. Preliminary December industrial production rose 2.7% m/m, ahead of forecasts. The December unemployment rate ticked up slightly to 2.8%. In China, the official PMI survey of manufacturers, including large, state-owned firms, slowed to 51.3 in January. The official January non-manufacturing PMI increased to 55.3. The January Markit/Caixin manufacturing PMI, which captures smaller businesses, remained steady at 51.5.
The US releases January ISM Non-Manufacturing PMI and December trade data. Jerome Powell will be sworn in as the new US Federal Reserve Chairman. The eurozone releases December retail sales numbers. The UK reports December industrial production and trade figures. In Asia, China releases inflation data and Japan reports January bank lending.
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.