Fisher Investments recaps the biggest market, political and economic news from last week, including US inflation measures, UK industrial and manufacturing production figures, and Chinese trade data.
In the US, initial jobless claims beat expectations in the week ending March 6, declining 5.9% to 712,000. February inflation measures fell slightly—with core consumer prices (excluding food and energy) coming in at 1.3% y/y. The Senate and House of Representatives passed a $1.9 trillion COVID relief package, which President Biden signed on Thursday. The bill includes an extension of enhanced unemployment benefits, another round of direct payments to households, an increased child tax credit and aid to state and local governments among many other provisions. Like previous relief packages, we believe these policies are not necessary for continued economic recovery but may provide a helpful lifeline for some families.
In the UK, January manufacturing and industrial production were lower than expected, declining 5.2% y/y and 4.9% y/y, respectively. January exports and imports fell 11.2% m/m and 18.5% m/m, respectively. When assessing this recent decline in trade, we believe it’s currently impossible to separate the impact of new customs checks from the ongoing pandemic-related delays at border checkpoints. It will likely take a few months to get a better sense of how Brexit itself is altering trade patterns. In the eurozone, the third estimate of Q4 2020 GDP was -0.7%, slightly better than earlier estimates. January industrial production increased 0.8% m/m, and 0.1% y/y. The European Central Bank left interest rates unchanged but indicated they would increase the pace at which they purchase bonds under current quantitative easing (QE) efforts.
In Japan, preliminary February money supply (M2) expanded 9.7% y/y, in line with estimates. The second estimate of Q4 2020 GDP was adjusted down to 2.8% q/q from 3.0% q/q previously—lower than expected. The Conference Board’s January Leading Economic Index (LEI) reading for Japan increased 0.6% m/m. In China, money supply (M1) grew 7.7% y/y, missing expectations. February trade data handily beat analyst forecasts—with exports and imports rising 60.6% and 22.2% y/y, respectively. Core consumer prices fell 0.2 % y/y in February, less than expected.
The Week Ahead:
The US releases February industrial production, manufacturing production, retail sales and trade data. Japan reports February industrial production, trade data and core inflation. The eurozone announces core inflation data. China releases January-February retail sales and unemployment. The UK reports February unemployment data. The Federal Reserve, Bank of England and Bank of Japan meet to set their respective monetary policies. On Wednesday, the Netherlands holds general elections for its House of Representatives.
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.