Weekly Wrap-Up

Last Week In Markets: Jul 19 - Jul 23 2021

Fisher Investments recaps the biggest market, political and economic news from last week, including US UK and eurozone June PMI readings, eurozone retail sales and the June US Leading Economic Index.

In the US, the July Markit Flash Manufacturing Purchasing Managers’ Index (PMI) rose to 63.1, above expectations. The July Markit Flash Services PMI fell to 59.8, below estimates. Readings over 50 indicate expansion. The Conference Board’s June Leading Economic Index (LEI) increased 0.7% from the prior month. On Monday, the National Bureau of Economic Research (NBER) announced the recession accompanying last year’s lockdowns officially ended in April 2020, two months before the NBER officially declared it to be underway in June 2020. This illustrates two key points—1) recession data is a lagging indicator that cannot identify upcoming market shifts; and 2) last year’s recession was likely too short to qualify as a typical reset of the economic cycle, which in our view indicates growth stocks should continue leading amid ongoing recovery. For more, please see our 7/20/2021 commentary, “Two Points From 2020’s Two-Month Recession.”

In the eurozone, the July Markit Flash Manufacturing PMI fell slightly to 62.6, better than expectations. The July Market Flash Services PMI rose to 60.4, beating consensus estimates. In the UK, the July Markit/CIPS Flash Manufacturing and Services PMIs fell to 60.4 and 57.8, respectively, both missing estimates. June retail sales grew 0.5% m/m and 9.7% y/y, slightly higher than forecast. The European Central Bank left interest rates and quantitative easing unchanged.

In Japan, July core-core consumer prices (excluding food and energy) fell 0.2% y/y. June exports and imports rose 48.6% y/y and 32.7% y/y, respectively—both beating consensus estimates.

The Week Ahead:

The US and eurozone report first estimates of Q2 2021 GDP. The US announces preliminary June durable goods orders. The eurozone releases July inflation data. Japan reports preliminary July PMIs and June trade, industrial production and retail sales figures. China announces July PMI readings. The Federal Reserve meets to set monetary policy.