Fisher Investments recaps the biggest market, political and economic news from last week, including the US October Leading Economic Index (LEI) reading, October eurozone core consumer prices and Japanese Q3 GDP.
Markets were mixed amid positive vaccine headlines and renewed COVID-19 restrictions. While disruptive, these restrictions are not as severe as the lockdowns from March and April. Further, headlines and experts have discussed these measures for months, allowing stocks to start pre-pricing their impact. In our view, unless shutdowns end up being far worse than expected, stocks should continue rising as they look to the brighter future ahead. For more, please see our 11/18/2020 commentary, “Lockdowns, Slowdowns and the Adaptive, Efficient Market.”
In the US, the Conference Board’s Leading Economic Index (LEI) increased for the third consecutive month, growing 0.7% m/m in October. October retail sales rose 5.7% y/y and 0.3% m/m. October industrial and manufacturing production rose 1.1% m/m and 1.0% m/m, respectively—both modestly exceeding expectations.
In the eurozone, economic data were light. October core consumer prices (excluding food and energy) ticked up 0.2% y/y, in line with expectations. In the UK, October retail sales grew 5.8% y/y and 1.2% m/m, both higher than expected. October core consumer prices rose 1.5% y/y, slightly more than forecast.
In China, October retail sales rose 4.3% y/y, missing analyst estimates. October industrial production increased 6.9% y/y, better than expected. The October unemployment rate decreased slightly to 5.3%. In Japan, the first estimate of Q3 2020 GDP showed growth of 5.0% q/q, higher than expected and improving upon Q2’s -8.2% q/q decline. October core-core consumer prices (excluding energy and food) fell 0.7% y/y, in line with forecasts. October Markit/Jibun Bank services and manufacturing Purchasing Managers’ Indexes (PMIs) were 46.7 and 48.3, respectively—below consensus estimates (readings over 50 indicate expansion). October imports fell 13.3% y/y, missing expectations, while exports fell 0.2% y/y, higher than forecast. Final September industrial production decreased 9.0% y/y, in line with forecasts.
The Week Ahead:
The US and eurozone release preliminary November Markit manufacturing and services PMIs. The US also releases the second estimate of Q3 2020 GDP. The eurozone releases money supply data and the UK announces November PMI figures. Japan reports November’s Leading Economic Index (LEI) reading.
Tip of the Week:
Fisher Investments’ offices and US markets will be closed on Thursday, November 26 in observance of Thanksgiving. Our offices will reopen Friday, November 27.
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.