US economic data were mostly positive. Corporate earnings releases continued this week—most S&P 500 companies have reported and first quarter earnings are up 13.5% y/y thus far, supporting our expectation for double-digit earnings growth this year. The Institute for Supply Management’s (ISM) April non-manufacturing Purchasing Managers’ Index (PMI) rose to 57.5—readings over 50 indicate expansion—besting estimates. The ISM’s April manufacturing PMI missed expectations, but remains at a healthy 54.8. April nonfarm payrolls expanded by 211,000, ahead of the 185,000 forecast. Unemployment fell further than forecast to 4.4%, a cycle low. In US politics, Congress passed a measure funding the government through September. On Thursday, the House of Representatives narrowly passed a revised version of the American Health Care Act. The bill now heads to the Senate, but it’s unlikely the Senate will vote on it without a meaningful overhaul.
European data were mixed. April eurozone manufacturing PMI decelerated to 56.7, missing expectations, but the services PMI accelerated ahead of estimates to 56.4, remaining near recent highs. March eurozone unemployment remained stable at 9.5%. March eurozone retail sales increased 2.3 y/y, beating expectations. In the UK, April manufacturing and services PMIs both beat forecasts—increasing to 57.3 and 55.8, respectively.
Asian economic releases were light. Japan’s April services PMI decreased to 52.2. China’s April manufacturing PMI decreased to 50.3, slightly missing expectations. Metal prices in China fell sharply following increased government oversight on speculation and shadow banking. South Korean exports grew 24.2% y/y—the fastest pace since 2011.
The US releases April consumer prices and retail sales. China releases April consumer prices, loan growth and trade data. The eurozone posts March industrial production and the UK reports April retail sales and March industrial and manufacturing production. The second round of France’s presidential election takes place Sunday. Polls show populist candidate Marine Le Pen significantly lagging centrist Emmanuel Macron. Regardless of the outcome, uncertainty should fall and gridlock likely prevails—positive for stocks.
Sources for all data cited are FactSet and Bloomberg. 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.