Weekly Wrap-Up

Last Week In Markets: July 13 - July 17 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US, UK and eurozone June inflation figures, US June industrial production and retail sales figures and Chinese Q2 2020 GDP.

Global markets rose amid some positive surprises in economic data. However, fears of another steep market downturn abound as global stocks near their previous highs. We believe overly dour investor expectations lower the likelihood stocks plunge a second time. Reality would have to prove much worse than already feared to reverse this nascent bull market—possible, but increasingly unlikely in our view. For more, please see Ken’s July monthly column, “The Biggest Risk to Your Portfolio as Stocks Approach Global Highs.”

US data were mostly positive. June retail sales climbed 7.5% m/m, higher than expected, and 1.1% y/y. June core consumer prices (excluding food and energy) rose 0.2% m/m and 1.2% y/y, in line with forecasts. Industrial production grew 5.4% m/m in June, exceeding expectations, though fell 10.8% y/y. June manufacturing production increased 7.4% m/m, also beating estimates. Initial jobless claims for the week ending July 11 were 1.3 million, slightly higher than expected but continued a multi-month trend lower.

In the eurozone, data were mixed. June core consumer prices (excluding food, energy, alcohol and tobacco) rose 0.8% y/y, in line with expectations. May industrial production fell 20.9% y/y, less than forecast, but rose 12.4% m/m. In the UK, May 2020 GDP increased 1.8% m/m, missing expectations. However, modest growth seems consistent with the fact economic reopening wasn’t universal or all at once. For more commentary on UK GDP, please see our 07/14/2020 article, “The UK’s Limited Reopening Limited May GDP.” May industrial production fell 20.0% y/y, less than expected, but rose 6.0% m/m. May manufacturing production grew 8.4% m/m but fell 22.8% y/y. June core consumer prices (excluding energy, food and alcohol) rose 1.4% y/y, above estimates. The May unemployment rate remained at 3.9%.

In Japan, May industrial production declined 8.9% m/m and 26.3% y/y. May retail sales grew 2.1% m/m. The Bank of Japan left its monetary policy unchanged. In China, Q2 2020 GDP increased 3.2% y/y, exceeding expectations. June import and export values rose 2.7% y/y and 0.5% y/y respectively, both beating estimates. June retail sales fell 1.8% y/y, lower than forecasts. June industrial production grew 4.8% y/y, in line with expectations. June unemployment decreased to 5.7% from 5.9% in May.

The Week Ahead:

The US, UK, Japan and eurozone release preliminary July manufacturing and services purchasing managers’ indexes (PMIs). The UK posts June retail sales figures. Japan announces June consumer prices and trade figures.

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.