Global equities ended up 0.1% in a quiet week for economic data. US data were positive overall. The Conference Board’s Leading Economic Index continued rising in May (0.3% m/m). A positively sloping yield curve contributed most to the rise. New orders—an indicator of future economic activity—also contributed to the increase. Markit’s June Flash Purchasing Managers Indexes (PMIs) remained positive, indicating solid growth in manufacturing and services. May new home sales returned to growth, rising 2.9% m/m—a notable turnaround from April’s -7.9% contraction. Median home sales prices jumped 11.5% m/m (16.8% y/y). Home sales can be volatile month to month, but May’s data suggests the US housing market remains healthy. Part one of the Federal Reserve’s annual bank stress test was revealed this week and initial results show every major US bank easily passed. In Europe, economic data were sparse. The eurozone’s Markit PMIs continued expanding in June. Manufacturing accelerated slightly to 57.3 (readings over 50 indicate growth). Services slowed, but stayed expansionary at 54.7. April eurozone construction output grew a healthy 3.2% y/y. In Asia, May Japanese trade accelerated as last year’s positive trend in exports continued. Exports grew slower than anticipated but remain high at 14.9% y/y. Imports sharply exceeded expectations, rising 17.8% y/y. However, foreign investors continued selling Japanese stocks. This suggests investor sentiment may have turned overly dour relative to fundamentals. Economic releases in China were light, but index provider MSCI announced plans to add a small exposure to yuan-denominated Chinese equities (A-shares) in its Emerging Markets Index starting in June 2018.
Next week will see a flurry of economic data. The US releases May durable goods orders, trade, inventories and pending home sales. The UK releases May consumer credit and the eurozone releases June CPI. Japan announces May retail sales, inflation, unemployment and industrial production. China releases May industrial profits and June PMIs.
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.