Weekly Wrap-Up

Last Week In Markets: July 2 - July 6, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US-China trade rhetoric, eurozone retail sales data, and Japanese PMI numbers.

Global equities rose during a holiday-shortened week.

In the US, data were positive. Purchasing Managers’ Index (PMI) data indicated expansion. The June ISM manufacturing and non-manufacturing PMIs rose to 60.2 and 59.1, respectively. The June Markit manufacturing PMI was revised higher to 55.4, while the services PMI came in at 56.5, in-line with the initial estimate. June nonfarm payrolls increased by 213,000, above the forecast for 195,000. The June unemployment rate rose slightly to 4.0%. May exports and imports rose 1.9% m/m and 0.4% m/m, respectively. On Friday, the US implemented 25% tariffs on $34 billion worth of Chinese goods. In response, China retaliated with equivalent tariffs as previously announced. However, when scaled properly, the current and threatened tariffs only represent a fraction of US and global GDP. While a true global trade war is always possible, it remains far from probable right now in our view.

European data were also positive. The June eurozone Markit manufacturing PMI rose to 54.9, slightly less than expected, while the services PMI rose to 55.2, above the initial estimate. Both readings indicate continued economic growth. May eurozone retail sales grew 1.4% y/y. The May unemployment rate held steady at 8.4%. In the UK, June Markit/CIPS services, manufacturing and construction PMIs all grew more than expected.

In Asia, Japan’s June Nikkei services and manufacturing PMIs came in at to 51.4 and 53.0, respectively. In China, the official June manufacturing PMI fell to 51.5, below estimates, while the non-manufacturing PMI rose to 55.0, above expectations. The June Markit/Caixin manufacturing and services PMIs, which includes smaller businesses, came in at 51.0 and 53.9, respectively.

The Week Ahead:

The US releases June inflation figures. The UK reports May industrial production, manufacturing and trade data. The eurozone announces June industrial production. China reports June money supply, loan growth, inflation and trade data.

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.