Global equities finished down 0.7% amid a light week for economic news. US economic releases were largely positive. February industrial and manufacturing production rose 4.4% y/y and 2.5% y/y, respectively. February retail sales unexpectedly fell 0.1% m/m, but increased 4.0% on a year-over-year basis. Core consumer prices (excluding food and energy) increased 1.8% y/y in February—in line with market expectations. The lack of media reaction to February’s inflation report highlights how quickly market correction narratives can come and go. A month ago, headlines showed concerns about a January inflation spike threatening markets. Popular data interpretations can shift quickly and baselessly in the short term—this is why we focus on longer-term trends. We believe inflation likely remains benign for the foreseeable future. For more, see our 2/9/2018 MarketMinder article, “One Investing Lesson From the Media’s Correction Contradictions.”
In the eurozone, January industrial production fell 1.0% m/m but rose 2.7% y/y—both lower than forecasts. February core consumer prices (excluding energy, food, alcohol and tobacco) increased 1.0% y/y, in line with expectations. Wages grew 1.7% y/y in Q4 2017, slightly above the 1.6% y/y increase in Q3 2017.
In Asia, data were mixed. Japan’s industrial production increased 2.5% y/y in January, below expectations. January retail sales increased 1.5% y/y, missing expectations. In China, industrial production rose 7.2% y/y in January and February, ahead of expectations. Retail sales increased 9.7% y/y in January and February, slightly below forecasts. The National People’s Congress voted to end the two-term limit on the presidency, allowing current President Xi Jinping the opportunity to be re-elected at the end of his current term in 2022. This decision was broadly anticipated and largely maintains the status quo.
The US, eurozone and Japan report March Flash Purchasing Managers’ Indexes (PMIs). The US releases the Conference Board’s February Leading Economic Index (LEI). The UK announces February retail sales, inflation and the January unemployment rate. Japan reports February inflation and trade data. The Fed and the Bank of England meet to determine 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.