Global equities fell a week after US midterm elections amid ongoing volatility tied to corporate earnings concerns and Brexit developments. US economic data were largely positive. October industrial production rose 0.1% m/m, while October manufacturing production rose 0.3% m/m, both beating expectations. October core inflation (excluding food and energy) rose 2.1% y/y, in line with the prior month’s reading. September business inventories increased 0.3% m/m, as expected. October retail sales grew 4.6% y/y.
In the eurozone, data were mixed. Core consumer prices (excluding food and energy) rose 1.1% y/y, in line with expectations. September industrial production grew 0.9% y/y, higher than consensus. In the UK, October core consumer prices (excluding food and energy) increased 1.9% y/y. October retail sales rose 2.2% y/y, less than expected. On Wednesday, the UK cabinet approved a draft Brexit withdrawal agreement negotiated earlier in the week—advancing it toward an EU and UK parliamentary vote. However, after the approval some euroskeptic ministers resigned, with some renewing calls for a second Brexit referendum. Markets wobbled and the pound fell in response. In our view, while Brexit negotiations still face uncertainty, we see the deal as a small positive. Any progress toward reducing Brexit uncertainty should be a positive for stocks longer-term. For additional commentary, please see our 11/16/2018 MarketMinder column “The Brexit Agreement’s Aftermath.”
In Asia, Japanese preliminary Q3 2018 GDP fell 0.3% q/q. September industrial production fell 2.5% y/y, missing consensus estimates, while September retail sales rose 2.2% y/y. In China, October industrial production expanded 5.9% y/y, slightly beating expectations. October retail sales increased 8.6% y/y, less than expected.
Data releases are sparse. The US reports November manufacturing and services flash Purchasing Managers Indexes (PMIs), October durable orders and housing starts figures. The eurozone also reports November manufacturing and services flash PMIs. Japan releases November Nikkei Manufacturing flash PMI and October trade and inflation data.
US markets and our offices will be closed on Thursday, November 22 in observance of Thanksgiving. Our offices will reopen as usual on Friday, November 23. From all of us here at Fisher Investments, we wish you and your loved ones a happy Thanksgiving. As always, thank you for being valued clients.
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.