Global stocks ended modestly higher this week, rising 0.1%.
Markets continued digesting US election results, shifting their focus to Trump’s potential policy initiatives and cabinet appointments. To us, pre-election concerns about both candidates’ policies were speculative and overly dour, forgetting how difficult it will actually be to accomplish much. We expect Trump accomplishes less than hoped or feared over the next 12-18 months, and relief from pre-election angst should continue.
US October data were mostly positive. The Conference Board’s US Leading Economic Index (LEI) continued rising in October, buoyed by worker production, core capital goods orders and a positively sloped yield curve. October retail sales grew 0.8% m/m, beating estimates and accelerating from September. Inflation remained tame, rising 2.1% y/y in October, while industrial production was flat, meeting expectations. October housing data were robust as housing starts and new permits were stronger than expected. Finally, weekly initial jobless claims fell to lows not seen since 1973. Outside of economic releases, Fed Chairwoman Yellen’s congressional testimony revealed little regarding future monetary policy, though markets increasingly expect a December rate hike.
European data were sparse. Eurozone industrial production increased 1.2% y/y ahead of estimates in September, while inflation rose 0.5% y/y as expected. In the UK, October retail sales grew 2% from the previous month, beating expectations. Other UK data, including a falling unemployment rate and modest inflation, remain consistent with our view Brexit-induced recession fears are overblown.
China released key October economic data. Industrial production registered a healthy 6.1% y/y. Retail sales also remained elevated, growing 10% y/y, but slightly missed estimates. Broader money supply growth and fixed investment beat expectations, indicating the Chinese economy remains stable despite worries to the contrary.
The Week Ahead: Economic releases are light in the Thanksgiving holiday week. The US announces durable goods orders and home sales while the Fed releases November meeting minutes. French voters go to the polls in a presidential party primary. Eurozone PMI data is expected and Japan releases inflation and PMI 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.