Weekly Wrap-Up

Last Week In Markets: May 21 - May 25, 2018

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

Global equities fell amid generally positive economic reports.

In the US, May Markit manufacturing and services Flash Purchasing Managers’ Indexes (PMIs) rose to 56.6 and 55.7, respectively, with both indicating expansion and manufacturing hitting its highest level since September 2014. April durable goods orders fell 1.7% m/m, following March’s 2.7% m/m increase. With 490 S&P 500 companies reporting as of Friday, Q1 2018 earnings and revenue growth averaged 24.9% y/y and 8.5% y/y, respectively. Both figures outpace initial Q1 growth estimates—consensus forecasted 17.1% y/y earnings and 7.3% y/y revenue growth. In politics, the US and China agreed not to pursue new tariffs on the grounds China will improve intellectual property protections and buy an unspecified amount of US-made goods. While getting past the stalemate may lift sentiment, we believe the resolution is as symbolic as the tariff threats were and likely represents little change to bilateral or global trade. For more, read our 05/22/2018 MarketMinder commentary, “Trade Truce?

In the eurozone, May Markit manufacturing and services Flash PMIs fell to 55.5 and 53.9, respectively—lower than expectations but still indicating expansion. In the UK, April core consumer prices (excluding energy and food) rose 2.1% y/y, higher than forecasts. April retail sales grew 1.4% y/y, beating expectations and the second estimate of Q1 2018 GDP was 1.2% y/y, confirming the preliminary estimate.

Japan’s April trade data were stronger than March’s but missed expectations: Export and import values rose 7.8% y/y and 5.9% y/y, respectively. The May Nikkei manufacturing Flash PMI came in at 52.5, down from April and missing forecasts.

The Week Ahead:

The US releases May nonfarm payrolls, unemployment, manufacturing PMIs and the second estimate of Q1 2018 GDP. The eurozone reports April loan growth, May Markit manufacturing PMI, inflation and unemployment data. Japan and China post May manufacturing PMIs. Japan also releases April retail sales and unemployment figures.

Tip of the Week:

US Markets and Fisher Investments offices are closed Monday, May 28 in observance of Memorial Day.

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.