Global equities rose during a week featuring US midterm elections. In the US, economic data were positive. The October Markit services Purchasing Managers’ Index (PMI) indicated continued expansion at 54.8 (readings over 50 indicate expansion). The ISM non-manufacturing PMI hit 60.3 in October—beating market expectations of 59.3. In politics, midterm elections were held Tuesday. Overall, the election outcome is largely what we expected—the Democratic Party picked up the House and the Republican Party maintained control of the Senate. The result is gridlock. Combined with falling uncertainty, these two factors have historically been a powerful positive for stocks. For more, see our 11/7/2018 MarketMinder article, “All Over but the Shouting.”
In the eurozone, the final reading of the October Markit services PMI was 53.7. September retail sales grew 0.8% y/y, slightly above estimates. In the UK, the first estimate of Q3 2018 GDP showed 1.5% y/y growth, in line with forecasts. September industrial production stayed flat at 0.0% y/y, missing expectations, while manufacturing production rose 0.5% y/y. September imports decreased 2.5% y/y and exports increased 1.2% y/y.
In Japan, the October Nikkei services PMI increased to 52.4. September household spending fell 1.6% y/y, in line with expectations. September bank lending rose 2.2% y/y, slightly lower than expected. In China, the October Caixin services PMI fell to 50.8, below expectations but remaining expansionary. October imports and exports increased 21.4% y/y and 15.6% y/y, respectively—both beating estimates. October inflation increased 2.5% y/y.
The US releases October inflation and trade data. The eurozone publishes October inflation and September industrial production and trade data. The UK reports October inflation and retail sales. Japan announces its preliminary Q3 2018 GDP estimate and October industrial production and retail sales data. China posts October industrial production and retail sales 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.