Fisher Investments recaps the biggest market, political and economic news from last week, including US, UK, eurozone, China and Japan October services and manufacturing PMIs, US durable goods orders and the US presidential election.
Markets rose as the US election dominated headlines. With ballots still being counted, and potential recounts and legal challenges on the horizon, it may be days or even weeks before the final results are known. While delayed election results temporarily extend uncertainty, we believe the eventual clarity and likely continued gridlock in Congress will be a bullish tailwind for markets. For more election-related commentary, please see our recent commentary, “Counting Down to Gridlock” and “Election 2020 Flash: Georgia on Our Minds.”
In the US, the October Markit Manufacturing Purchasing Managers’ Index (PMI) increased incrementally to 53.4 while the Markit Services PMI rose to 56.9 (readings over 50 indicate expansion). The October ISM Non-Manufacturing PMI fell to 56.6, slightly below expectations. The unemployment rate dropped to 6.9% in October—improving from September’s 7.9% rate and beating expectations. September exports and imports rose 2.6% m/m and 0.5% m/m, respectively. September durable goods orders increased 1.9% m/m. On Thursday, the Federal Reserve left monetary policy unchanged.
In the eurozone, September retail sales fell 2.0% m/m—more than expected—but rose 2.2% y/y. The October Markit Manufacturing PMI rose to 54.8 while the Markit Services PMI fell to 46.9. In the UK, the October Markit/CIPS Manufacturing PMI came in at 53.7, slightly exceeding forecasts, while the Markit/CIPS Services PMI was 51.4.
In Japan, the October Jibun Bank Manufacturing PMI modestly increased to 48.7. In China, October’s Markit/Caixin Manufacturing and Services PMIs came in at 53.6 and 56.8, respectively, slightly higher than expectations.
The Week Ahead:
The US releases October retail sales figures. The eurozone reports September industrial production, trade data and the second estimate of Q3 2020 GDP. The UK announces September industrial production, unemployment data and the first estimate of Q3 2020 GDP. China posts October loan growth, inflation and trade data. Japan reports September retail sales and October money supply (M2).
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.