Weekly Wrap-Up

Last Week In Markets: Mar 30 - Apr 03, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including an increase in “shelter in place” or similar orders in the US, as well as the release of March Purchasing Managers’ Indexes (PMIs) across several major economies.

Global markets fell as the first quarter ended and second quarter began. The sudden plunge in stocks in the first quarter, coupled with the ongoing spread of the novel coronavirus, has generated immense fear around the world. We empathize greatly with those whose personal health or loved ones are impacted by this virus. At this juncture, it is critical to understand stocks, the economy and public health data do not move in lockstep. Stocks often move first—anticipating the future—and can rebound before economic or public health data show signs of improvement. For more, please see our 04/01/2020 article, “Separate Your Stock Market Views.”

In the US, more states issued “shelter in place” or similar orders and economic data expectedly disappointed. March Markit Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were revised down to 48.5 and 39.8, respectively—both indicating contraction and reflecting the wide-scale institutionally induced shutdowns in society right now. Final February durable goods orders remained unchanged from the initial estimate of 1.2% m/m. New weekly unemployment claims doubled from last week, rising to 6.6 million. While the figure is striking, remember employment data is typically a lagging indicator for stocks. For more, see our 3/26/2020 article, “Putting Historic Jobless Claims Into Perspective.

In Europe, data were similarly negative. Markit revised their March Manufacturing and Services PMIs down to 44.5 and 26.4, respectively, with both missing expectations. Core consumer prices (excluding food and energy) rose 1.0% y/y in March, slightly less than expected. In the United Kingdom, the third revision to Q4 2019 GDP was released at 1.1% y/y, in line with forecasts. CIPS/Markit announced final readings for March Manufacturing and Services PMIs at 47.8 and 34.5, respectively. Money supply (M4) rose 0.3% m/m in February, decelerating from January.

Preliminary Japanese industrial production data declined 4.7% y/y in February, while retail sales increased 1.7% y/y. Markit/Jibun Bank released March Manufacturing and Services PMIs of 44.8 and 33.8, respectively. In China, Markit/Caixin released March Manufacturing and Services PMIs at 50.1 and 43.0, respectively—significantly higher than February’s readings and a possible sign economic activity continues to rebound.

The Week Ahead:

The US releases March inflation data while the UK reports February industrial production and trade figures. China announces March new loan growth, money supply and inflation data, while Japan releases March bank lending and the preliminary Leading Economic Index.

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.