Fisher Investments recaps the biggest market, political and economic news from last week, including final April manufacturing and services Purchasing Managers' Indexes (PMIs), the US April unemployment rate, and UK March money supply (M4).
In the US, the final April S&P Global Manufacturing Purchasing Managers’ Index (PMI) was revised slightly lower to 59.2 (readings over 50 indicate expansion) while the April S&P Global Services PMI was revised up to 55.6. Unemployment was 3.6% in April, unchanged from the prior month’s reading. Final March durable goods orders were 1.1% m/m, higher than forecast. As widely expected, the US Federal Reserve raised the fed-funds target rate by half a percentage point to 0.75%-1.0%—its first rate hike larger than a quarter point since 2000. The Fed also confirmed quantitative tightening (QT) will begin in June at a pace eventually reaching $95 billion per month. As we’ve noted previously, while monetary policy decisions are worth monitoring closely, Fed tightening cycles aren’t automatically negative for stocks. Based on where short- and long-term interest rates are today, we don’t believe continued rate hikes are likely to cause recession in the near future. For more, please see our 5/4/2022 commentary, “Our Take on the Fed’s Half-Point Hike.”
In the UK, the final April S&P Global/CIPS Manufacturing and Services PMIs were revised higher to 55.8 and 58.9, respectively. March money supply (M4) rose 0.1% m/m and 5.4% y/y. The Bank of England raised its benchmark interest rate by 25 basis points to 1%. In the eurozone, the final April S&P Global Manufacturing and Services PMIs were 55.5 and 57.7, respectively, both higher than estimates. March retail sales rose 0.8% y/y but fell 0.4% m/m. March unemployment was 6.8%—ticking down from February’s 6.9% reading.
In Asia, data releases were light amid bank holidays. In Japan, the final April Jibun Bank Manufacturing PMI was revised higher to 53.5. In China, the April Markit/Caixin Services PMI fell to 36.2 amid tighter COVID-19 containment measures.
The Week Ahead:
The US and China announce April consumer prices. The eurozone and UK release March industrial production. The UK reports the first estimate of Q1 2022 GDP, Q1 trade data and March manufacturing production. China releases April trade data and new loan growth. Japan and China release April money supply (M2) figures. Japan announces the first estimate of the March Leading Economic Index (LEI) reading.
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.