Weekly Wrap-Up

Last Week In Markets: June 4 - June 8, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US economic releases, eurozone and UK PMI numbers and Chinese trade data.

Global equities rose 1.4% amid generally positive economic reports. US economic data were mostly positive. The May Markit services Purchasing Managers’ Index (PMI) rose to 56.8, beating expectations and indicating expansion. Similarly, the May ISM non-manufacturing PMI—which represents about 70% of the US economy—rose to 58.6. Volatile factory orders were down 0.8% m/m in April on weaker demand for transport equipment—primarily civilian aircraft. However, excluding transportation, factory orders grew 0.4% m/m. In April, imports fell 0.2% m/m while exports rose 0.3% m/m.

European data were also generally positive. The eurozone’s third estimate of Q1 2018 GDP remained at 2.5% y/y, as expected. The May Markit services PMI came in at 53.8, slightly below expectations but still indicating growth. April retail sales increased 1.7% y/y. In the UK, the May Markit/CIPS services PMI—which represents around 80% of the UK economy—rose to 54.0, ahead of estimates. UK housing prices rose 1.5% m/m and 1.9% y/y in the three months ending in May. On Sunday, Switzerland will vote on a referendum that would establish a 100% reserve requirement—restricting Swiss banks from lending more money than they have in deposits. Polls indicate the referendum is unlikely to pass.

In Japan, the second estimate of Q1 2018 GDP confirmed an annualized 0.6% q/q contraction. The May Nikkei services PMI fell slightly to 51.0 but still indicated modest expansion. Japan’s Leading Economic Index rebounded in April, rising 1.1% m/m, with falling inventories and new housing construction contributing the most to the increase. May bank lending increased 2.0% y/y. In China, the May Markit/Caixan services PMI—which includes smaller businesses—came in at 52.9, matching expectations. May export and import values grew 12.6% y/y and 26% y/y, respectively—both surpassing expectations. The International Monetary Fund (IMF) agreed to lend Argentina $50 billion over three years to help Argentina avoid default after suffering from soaring inflation and a weakening peso.

The Week Ahead:

President Donald Trump is scheduled to meet with North Korea’s Kim Jong-un in Singapore on June 12. The US releases May inflation, retail sales and industrial production. The eurozone and the UK announce May inflation and April industrial production and trade figures. The UK also reports April unemployment data. China and Japan release retail sales and industrial production. The Fed, European Central Bank and Bank of Japan meet to set their respective monetary policies.

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.