Fisher Investments recaps the biggest market, political and economic news from last week, including ISM and Markit Purchasing Manager’s Indexes, eurozone GDP growth and Japanese Leading Economic Index (LEI).
Global equities rose 0.8% amid generally positive economic reports. Particularly, October’s Purchasing Managers’ Indexes (PMIs) indicate a pickup in overall business activity despite continued global manufacturing weakness—potentially assuaging fears of a manufacturing slump spreading to the broader global economy. For more, please see our 11/06/2019 commentary, “October’s Less Gloomy Business Surveys.” In the US, the October Markit Composite and Services PMIs decreased slightly to 50.9 and 50.6 respectively. However, both readings were still above 50, indicating expansion. Additionally, the October ISM Non-Manufacturing PMI rose to 54.7 from 52.6 the prior month and the more forward-looking ISM Non-Manufacturing New Orders rose to 55.6. September exports and imports fell 1% m/m and 1.7% m/m, respectively—less than expected. The October unemployment rate remained unchanged at 3.6%.
In the eurozone, data were mostly positive. October’s Markit Composite and Services PMIs rose to 50.6 and 52.2, respectively. The October Markit Manufacturing PMI rose to 45.9 from September’s reading of 45.7, though still indicated contraction. Preliminary Q3 2019 GDP grew 1.1% y/y. Core consumer prices (excluding food and energy) rose 1.1% y/y, slightly higher than expected. September retail sales increased 3.1% y/y, beating forecasts. September’s unemployment rate held steady at 7.5%. In the UK, the Bank of England voted to keep interest rates unchanged. The final reading of the October Markit/CIPS Services PMI was 50.0. The October Markit/CIPS Manufacturing PMI rose to 49.6.
In Japan, the Conference Board’s September Leading Economic Index (LEI) rose to 92.2. The final October Markit/Jibun Bank Services PMI fell more than expected to 49.7. The Markit/Jibun Bank Manufacturing PMI remained flat at 48.4. Preliminary September industrial production grew 1.1% y/y. September imports and exports decreased 1.5% y/y and 5.2% y/y, respectively. September retail sales increased 9.1% y/y and September household spending increased 9.5% y/y, both exceeding expectations. In China, the October Caixin Composite PMI rose to 52.0 while the Services PMI fell to 51.1. October exports and imports decreased 0.9% y/y and 6.4% y/y, respectively
The Week Ahead:
The US releases October retail sales, consumer prices, and industrial and manufacturing production figures. The eurozone publishes October consumer prices and September industrial production. The UK posts October consumer prices, September industrial production figures and preliminary Q3 2019 GDP growth. Japan announces preliminary Q3 GDP growth, September industrial production and October bank lending data. China reports October retail sales, loan growth and industrial production.
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.