Weekly Wrap-Up

Last Week In Markets: June 18 - June 22, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US-China tariff threats, eurozone PMI numbers, and Japanese inflation data.

Global equities fell as US-China tariff rhetoric resurfaced.

US economic data were mostly positive. The Conference Board’s May Leading Economic Index (LEI) rose 0.2% m/m, slightly below expectations, but still indicates economic growth ahead. Importantly, LEI’s more forward-looking components such as the interest rate spread, new orders and Leading Credit Index all positively contributed. The June Markit manufacturing and services Flash Purchasing Managers’ Indexes (PMIs) came in at 56.0 and 56.5, respectively—both indicating expansion. Volatile housing starts rebounded 5.0% m/m in May, after declining in April. Monday, President Trump threatened 10% tariffs on an additional $200 billion worth of Chinese goods. In retaliation, the Chinese government threatened a combination of tariffs and regulatory action against US companies operating in China. However, despite the alarmist rhetoric and news headlines, the tariffs between the US and China—both currently imposed and threatened—amount to less than 0.4% of the countries’ combined 2016 GDP. We will continue to monitor this situation closely.

In Europe, data reports were sparse. The June eurozone Markit manufacturing and services Flash PMIs each came in at 55.0—the manufacturing index matched forecasts while the services index beat estimates. Importantly, both readings indicated expansion. As expected, the Bank of England left interest rates and quantitative easing balances unchanged.

In Asia, economic releases were also light. Japan’s May export and import values rose 8.1% y/y and 14.0% y/y, respectively—both beating expectations. May core-core (excluding food and energy) consumer prices rose 0.3% y/y, in line with forecasts. The May Markit manufacturing PMI rose to 53.1, higher than the consensus estimate.

The Week Ahead:

US data releases include the third estimate of Q1 2018 GDP, May durable goods orders and new home sales. Eurozone announcements include May loan growth and money supply data. Updates from the UK include the third estimate of Q1 2018 GDP and May lending to individuals. Japan’s releases include May industrial production, retail sales and unemployment figures.

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.