Weekly Wrap-Up

Last Week In Markets: May 14 - May 18, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US economic releases, eurozone trade numbers, Italian political developments and Japanese GDP data.

Global equities fell -0.5% amid generally positive economic reports.

In the US, economic data were mostly positive. The Conference Board’s Leading Economic Index (LEI) increased 0.4% m/m in April, continuing its steady rise. A steepening yield curve and positive manufacturing data were among the top contributors. April retail sales rose 4.7% from a year ago. In April, industrial production expanded 0.7% m/m and 3.5% y/y while volatile housing starts fell 3.7% m/m, following a one-year high in March.

In the eurozone, the second estimate of Q1 2018 GDP confirmed 2.5% y/y growth—unchanged from the first estimate and representing the 20th consecutive quarter of expansion. March industrial production grew 3.0% y/y, missing expectations. April core consumer prices (excluding energy, food, alcohol and tobacco) rose 0.7% y/y, in line with forecasts. Eurozone March import and export values rose 9.6% m/m and 12.9% m/m, respectively. In Italy, two of the major political parties—the Five Star Movement and the League—agreed to form a combined populist government. While short-term uncertainty lingers, the final plan eased some fears, showing no immediate intention of leaving the European Union. For more, please see our 05/18/2018 commentary, “Italy's Populist Coalition Not as Populist as Feared.”

In China, April industrial production increased 7.0% y/y, higher than expected, and April retail sales grew 9.4% y/y. In Japan, March industrial production rose 2.4% y/y, above the 2.2% y/y consensus estimate. March retail sales increased 1.0% y/y, in line with forecasts. April consumer prices increased 0.6% y/y and core-core consumer prices (excluding fresh food and energy) increased 0.4% y/y. Japan’s first estimate of Q1 2018 GDP showed a 0.6% q/q contraction, missing expectations and ending Japan’s longest stretch of consecutive economic growth in decades. For more, please see our 05/17/2018 commentary, “Exports Couldn't Rescue Japanese Growth in Q1.”

The Week Ahead:

The US releases May services and manufacturing Flash Purchasing Managers’ Indexes (PMIs) and April durable goods orders. The eurozone reports May services and manufacturing Flash PMIs. The UK releases April inflation, retail sales and the second estimate of Q1 2018 GDP. Japan reports May manufacturing Flash PMI and April trade data.

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.