Weekly Wrap-Up

Last Week In Markets: July 29 - Aug 2, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including Markit Purchasing Manager’s Indexes and Japan’s industrial production.

Global equities fell amid mixed economic reports and the latest round of tariff talk between the US and China. In the US, data were light. The final July Markit manufacturing Purchasing Managers’ Index (PMI) fell to 50.4, beating expectations and showing continued expansion (readings above 50 indicate expansion). The July ISM manufacturing PMI fell to 51.2, missing expectations. On Wednesday, the Fed announced it would lower its target rate range by a quarter point to 2.0 – 2.25%, citing concerns about lower-than-expected inflation and global economic uncertainty. While this cut may help allay fears about the inverted US yield curve, in our view the cut is not necessary for this bull market and economic expansion to continue. For more, please see our 08/01/2019 commentary, “Quick Hit on Stocks’ Wobbly Fed Rate Cut Day.” After a week of unsuccessful trade talks, President Trump announced Thursday the US would impose an additional tariff of 10% on $300 billion in Chinese goods and products beginning September 1. We continue to believe these incremental moves lack the scale to derail this bull market. For more, please see our 08/01/2019 commentary, “The Latest Steps in Trump’s Tariff Tango.”

In the eurozone, preliminary Q2 2019 GDP beat expectations at 1.1% y/y. July final Markit manufacturing PMI dropped to 46.5 while still besting estimates. July preliminary core consumer prices (excluding energy, food, alcohol and tobacco) rose 0.9% y/y, narrowly missing expectations. June retail sales grew 1.1% m/m and 2.6% y/y, trouncing expectations. In the UK, July Markit/CIPS manufacturing PMI fell to 48.0, exceeding expectations, while July CIPS construction PMI came in at 45.3, missing expectations. The Bank of England left monetary policy unchanged.

In Asia, Japan’s preliminary June industrial production declined 3.6% m/m, missing expectations. Final June imports and exports slowed 5.2% y/y and 6.6% y/y, respectively. The Bank of Japan met and announced no changes to its monetary policy. China’s official July manufacturing and non-manufacturing PMI surveys, including large, state-owned firms, came in at 49.7 and 53.7, respectively. The July Markit/Caixin manufacturing PMI grew to 49.9, above consensus.

The Week Ahead:

The US and eurozone report July Markit services PMIs. The UK posts preliminary Q2 2019 GDP, June trade and June industrial and manufacturing production data. Japan announces Q2 2019 GDP. China releases July consumer prices, trade data and Caixin services 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.