Weekly Wrap-Up

Last Week In Markets: Mar 16 - Mar 20, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including continued market volatility due to coronavirus (COVID-19) fears and additional stimulus measures across the US and Europe.

Global markets fell this week as COVID-19 containment efforts and government and central bank stimulus dominated headlines. History shows spiraling, spreading fear is normal as bear markets worsen but isn’t a roadblock to their eventual end. The more fears are priced into stocks now, the higher the likelihood of better-than-expected outcomes to help turn the tide later. In our view, the best thing to do is remain patient and disciplined. As painful as the wild swings in a bear market can be in the near term, you don’t want to miss the start of a new bull market. For more, please see our 3/19/2020 article, “This Bear’s Evolving Fears Parallel the Past.”

In the US, data were few and mixed as Congress passed a second COVID-19 aid package valued at ~$100 billion on Wednesday and President Trump signed the bill into law. Retail sales fell 0.5% m/m in February, worse than expected. February industrial production rose 0.6% m/m, above expectations after falling in January. February housing starts fell slightly, declining 1.5% m/m to 1,599,000. On Sunday, 3/15, the Fed lowered interest rates to 0.0% - 0.25% and restarted its quantitative easing (QE) program. For more, please see our 3/16/2020 article, “The Fed’s Mixed Bag of Measures.”

In Europe, data were also light. February core consumer price growth (excluding food and energy) was unchanged from previous estimates at 1.2% y/y. In the UK, unemployment posted at 3.9% in January, slightly above consensus estimates. The Bank of England cut interest rates to 0.1% and announced it would increase its QE purchases. Meanwhile, the European Central Bank expanded its asset purchase program but left interest rates unchanged.

In Japan, the final estimate of January industrial production was revised up to 1.0% m/m, better than expected. Retail sales were also revised upwards to 1.5% m/m in January. Core consumer prices (excluding food and energy) rose 0.2% y/y in February, decelerating slightly from January. Preliminary estimates of February imports and exports values fell 14.0% y/y and 1.0% y/y, respectively. The Bank of Japan left interest rates unchanged but pledged to increase equity exchange-trade fund (ETF) purchases.

The Week Ahead:

The US, UK, eurozone and Japan all release preliminary March purchasing managers’ indexes. The US will release the third estimate of Q4 2019 GDP and February durable goods orders.

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.