Weekly Wrap-Up

Last Week In Markets: June 29 - July 03 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US May unemployment figures, Markit Purchasing Manager’s Indexes and UK Q1 2020 GDP.

Global markets rose during a holiday-shortened week in the US. In the US, the final June Markit manufacturing Purchasing Managers’ Index (PMI) was revised up slightly to 49.8—nearing expansionary territory (readings above 50 indicate expansion). The ISM manufacturing PMI improved from 43.1 in May to 52.6 in June, beating expectations. Nonfarm payrolls increased 4.8 million in June, ahead of expectations for 3 million—moving the unemployment rate down to 11.1%. In COVID-19 news, new daily cases crossed 50,000 for the first time—reaching a new single-day record. As a result, some states have paused reopening plans or reinstituted various shutdown measures. The virus’ resurgence has led to speculation lockdowns may be reinstituted—which some argue could upend stocks’ rally since March 23. While the rising number of cases is certainly bad, we think the key question for investors is the degree to which markets expect economic activity to shut down. It isn’t clear or certain whether a return of restrictions on the scale of this spring is coming, but markets are paying careful attention. For more, please see our 7/1/2020 commentary, “How Investors Should Approach America’s COVID Uptick.”

In the eurozone, the final June Markit manufacturing PMI was revised up to 47.4. June unemployment ticked up to 7.4%, below expectations of 7.7%. In the UK, the second reading of Q1 2020 GDP showed a 2.2% q/q and 1.7% y/y decline. Money supply (M4) increased 2.0% m/m in May. The final June Markit/CIPS manufacturing PMI was 50.1, meeting expectations.

In Asia, Japanese May retail sales fell 12.3% y/y, missing estimates. Preliminary industrial production fell 8.4% m/m, also missing estimates. Unemployment was 2.9% in May, slightly higher than expected. The June Markit/Jibun Bank final manufacturing PMI was 40.1. China released the official June manufacturing and non-manufacturing PMIs, coming in at 50.9 and 54.4, respectively. June’s Markit/Caixin manufacturing PMI (a better measure of overall manufacturing activity, including small businesses) was 51.2, above forecasts.

The Week Ahead:

The UK revises June’s Market/CIPS Services PMI. The US reports final June PMIs, while the eurozone releases May retail sales figures. China releases money supply growth and inflation.

Tip of the Week:

Fisher Investments’ offices and US markets will be closed on Friday, July 3, 2020 in observance of Independence Day. We will resume normal business hours on Monday, July 6, 2020.

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.