Fisher Investments recaps the biggest market, political and economic news from last week, including the first estimates of US and eurozone Q2 2021 GDP growth, UK June money supply (M4) and Japanese trade data.
In the US, the first estimate of Q2 2021 GDP growth was 6.5% annualized, missing the consensus forecast. Although most headlines expressed disappointment, we expected slowing growth as the economy returned towards its pre-pandemic state. Slowing growth doesn’t necessarily spell doom for markets, in our view, but does create a more favorable environment for large, less economically sensitive companies to do well going forward. For more, please see our 7/30/2021 commentary, “The Hints About Stock Leadership From Q2 US GDP.” June durable goods orders rose 0.8% m/m, missing expectations. On Wednesday, the Fed left the federal funds target range unchanged at 0.0% - 0.25% and will continue its current level of asset purchases.
In the eurozone, the first estimate of Q2 2021 GDP growth beat expectations at 2.0% q/q (8.2% annualized). June money supply (M3) rose 8.3% y/y. The June unemployment rate declined to 7.7%, better than forecasted. In the UK, June money supply (M4) rose 0.5% m/m and 6.9% y/y.
In Japan, the preliminary July Jibun Bank Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 52.2 and 46.4, respectively (readings over 50 indicate expansion). June industrial production grew 6.2% m/m and 22.6% y/y, both beating expectations. Final June imports and exports rose 32.7% y/y and 48.6% y/y, respectively. The June unemployment rate fell slightly to 2.9%, better than forecasted.
The Week Ahead:
The US, UK, and eurozone announce July PMI readings. The US releases the July unemployment rate. The eurozone reports June retail sales. The Bank of England meets to set monetary policy. China announces July trade data and PMI readings.
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.