Fisher Investments recaps the biggest market, political and economic news from last week, including the US Leading Economic Index (LEI), eurozone inflation and Chinese GDP.
Global equities fell amid mixed economic reports. In the US, June data reports were light, but mixed. The Conference Board’s Leading Economic Index (LEI) fell 0.3% m/m. Industrial and manufacturing production grew 1.3% y/y and 0.4% y/y, respectively—both missing expectations. Retail sales rose 3.4% y/y, topping forecasts.
European data were positive. Eurozone consumer prices rose 1.3% y/y in June, while core consumer prices (excluding energy, food, alcohol and tobacco) rose 1.1% y/y, in-line with expectations. Imports and exports increased 4.2% y/y and 7.1% y/y respectively in May. In the UK, June consumer prices and core consumer prices (excluding energy and food) climbed 2.0% y/y and 1.8% y/y, respectively—both in-line with estimates. The May unemployment rate remained at 3.8%. June retail sales expanded 1.0% m/m and 3.8% y/y, both exceeding forecasts. While negative sentiment proliferates on Europe’s economic future, our view is that the outlook remains largely positive. For more information, please see our 07/17/2019 commentary, “Quick Hit: Digging Into US and European Returns.”
In Asia, Japan recently implemented export restrictions on South Korean semiconductor production—and industry that comprises roughly 20% of South Korea’s total exports. While pundits fear these new restrictions may lead to a broader industry fallout between these key economies in the global Tech supply chain, our view is concerns over these restrictions are overblown. For more information, please see our 07/19/2019 commentary, “Putting the Japan/South Korea Export Dispute in Perspective.” Additionally, Japan’s core-core consumer prices (excluding energy and food) rose 0.5% y/y in June, unchanged from the prior month’s reading and slightly below estimates. June import and export values fell 5.2% y/y and 6.7% y/y, respectively. In China, June retail sales rose 9.8% y/y, better than forecast. June industrial production grew 6.3% y/y, higher from the previous month and beating expectations. Q2 2019 GDP increased 6.2% y/y, matching consensus expectations.
The Week Ahead:
US and eurozone data releases include July Markit manufacturing and services Flash Purchasing Mangers’ Indexes (PMIs). The US also reports June new home sales, durable goods orders and the first estimate of Q2 2019 GDP. The eurozone posts June money supply (M3) and loan growth data. The European Central Bank meets to set monetary policy. Japan announces the July Markit manufacturing Flash 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 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.