Weekly Wrap-Up

Last Week In Markets: June 03 - June 07, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including possible Fed monetary policy actions, European Purchasing Managers’ Indexes and Japanese capital spending.

In the US, economic data were mostly positive. The May Markit manufacturing and services Purchasing Managers’ Indexes (PMI) were reported at 50.5 and 50.9, respectively. (PMI readings over 50 indicate expansion.) The Institute for Supply Management’s (ISM) non-manufacturing PMI corroborated the Markit services report, rising to 56.9. April durable goods orders fell 2.1% m/m, but were flat excluding transportation orders. Some media headlines attributed this week’s market movement to Fed Chair Jerome Powell’s comments about potential future rate cuts. In our view, this was just another example of investors overestimating the Fed’s ability to influence US growth rates. For more, please see our 6/5/2019 MarketMinder commentary, “No, the Fed Doesn’t Need to Cut Rates, but….

In the eurozone, May Markit manufacturing and services PMIs were reported at 47.7 and 52.9, respectively. The third reading of Q1 2019 GDP was unchanged at 1.2% y/y. Q1 2019 exports and imports grew 0.6% q/q and 0.4% q/q, respectively. April retail sales rose 1.5% y/y, in line with consensus. In the UK, the May CIPS manufacturing and services PMI were reported at 49.4 and 51.0, respectively. The European Central Bank met Thursday and released details of its upcoming targeted longer-term financing operations, but made no changes to its negative target interest rate or other monetary policy.

In China, the May Markit/Caixin manufacturing and services PMIs were reported with readings of 50.2 and 52.7, respectively. In Japan, the May Nikkei services PMI fell to 51.7 while the second reading of the May Markit/JMMA manufacturing PMI rose to 49.8. The preliminary April Leading Economic Index fell to 95.5. Q1 2019 capital spending rose 6.1% y/y and April household spending rose 1.3% y/y, missing expectations.

The Week Ahead:

The US reports the May inflation, as well as industrial and manufacturing production figures. The eurozone and UK release April industrial production figures. China releases May trade data, loan growth and consumer prices. Japan reports Q1 2019 GDP data and April retail sales.

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.