Fisher Investments recaps the biggest market, political and economic news from last week, including US, UK, eurozone, Japanese and Chinese Purchasing Managers’ Indexes (PMIs), unemployment data and Japan’s October retail sales.
Global equities rose as we entered the final month of 2020. In the US, the final November Markit Manufacturing and Services Purchasing Managers’ Indexes (PMI) were 56.7 and 58.4, respectively (readings over 50 indicate expansion). The November ISM Manufacturing and Non-Manufacturing PMIs were 57.5 and 55.9, respectively. The unemployment rate fell to 6.7% in November, beating expectations. On Wednesday, the US House of Representatives followed the Senate in passing a bill requiring foreign companies to submit financial audits to US regulators to retain their listings on US stock exchanges. Some investors may fear delisting would represent a large negative for Chinese firms, but we don’t view it as a major risk for the companies or the US investors who own them. For more, please see our 12/4/2020 commentary “The Details Debunk Fears of Chinese Stock’s Delisting.”
In the eurozone, October retail sales rose 1.5% m/m and 4.3% y/y, both beating forecasts. The November Markit Manufacturing and Services PMIs fell to 53.8 and 41.7, respectively—both modestly exceeding expectations. October unemployment fell slightly to 8.4%. The UK November Markit/CIPS Manufacturing and Services PMIs were both revised upward from initial estimates to 55.6 and 47.6, respectively. Money supply (M4) in the UK grew 0.6% m/m in October.
Japan’s November Jibun Bank Manufacturing and Services PMIs rose to 49.0 and 47.8, respectively, more than preliminary estimates. October retail sales and preliminary industrial production rose 6.4% y/y and 3.8% m/m, respectively. Meanwhile, the October unemployment rate ticked up to 3.1%, above forecasts. In China, the official November NBS Manufacturing and Non-Manufacturing PMIs—focused on large, state-owned firms—came in at 52.1 and 56.4, respectively. The November Markit/Caixin Manufacturing and Service PMIs—which include smaller businesses—were 54.9 and 57.8, respectively.
The Week Ahead
The US and China release November inflation data. China reports November money supply (M2), loan growth and trade data. The eurozone announces its third estimate of Q3 2020 GDP. The UK releases October industrial production figures. Japan reports October’s Leading Economic Index (LEI) reading, November bank loans and its second estimate of Q3 2020 GDP.
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.