Fisher Investments recaps the biggest market, political and economic news from last week, including US, eurozone and Japanese Markit Purchasing Manager’s Indexes and UK money supply growth.
Global equities ended the week up despite daily market swings amid continued coronavirus (Covid-19) fears, Democratic presidential primaries and a Fed rate cut. While new disease outbreaks are alarming and tragic, they rarely pack enough economic punch to cause even a regional, much less global, recession. For more, please see our 03/04/2020 article, “The Coronavirus and Templeton’s Four Dangerous Words.”
In the US, voters took to the polls for “Super Tuesday,” winnowing the Democratic field. While it’s still too early to predict the Democratic nominee, we believe continued falling political uncertainty should benefit stocks as the year progresses. For more, please see our 03/04/2020 article, “And Then There Were Four.” In an effort to preempt the coronavirus’ potential economic impact, the Fed reduced the fed-funds target rate to 1.0% - 1.25% on Tuesday in its first “emergency” rate cut since 2008. The final February Markit Manufacturing and Services Purchasing Managers’ Indexes (PMIs) came in at 50.7 and 49.4, respectively (readings over 50 indicate expansion while reading below 50 indicate contraction). January durable goods orders were revised up to -0.2% m/m, still beating expectations.
In the eurozone, final February Markit Manufacturing and Services PMIs were released at 49.2 and 52.8, respectively. Retail sales increased 1.7% y/y in January, well above forecasts for a 1.1% y/y increase. In the UK, the final February Markit/CIPS Manufacturing PMI fell to 51.7 and the Services PMI decreased slightly to 53.2—both missing expectations. Money supply (M4) rose 0.6% m/m in January, accelerating from December.
In Japan, the January Leading Economic Index was revised down to -0.8% m/m. The final February Markit Manufacturing PMI came in at 47.8 while the services PMI decreased to 46.8, both above expectations. In China, the Markit/Caixin Manufacturing and Services PMIs reported at 40.3 and 26.5, respectively, with both readings below estimates.
The Week Ahead:
The US posts February core consumer prices. The eurozone releases January industrial production and Q4 2019 GDP and trade data. China reports February trade data and loan growth. Japan announces final Q4 2019 GDP.
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.