Weekly Wrap-Up

Last Week In Markets: Oct 1 - Oct 5, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US political news, eurozone retail sales data and Chinese PMI releases.

Volatility returned as global equities fell amid concerns over rising long-term interest rates. In our view the market reaction seems overwrought as it appears many people are misinterpreting recent statements by Fed Chair Jerome Powell. For more, see our 10/04/2018 MarketMinder.com article, “Context Is Everything.” US economic data were mostly positive. The September ISM manufacturing Purchasing Managers’ Index (PMI) fell to 59.8 while the ISM non-manufacturing PMI rose to 61.6. The September Markit manufacturing PMI remained at 55.6, as expected, while the Markit services PMI rose to 53.5. All four readings indicated continued expansion. August factory orders rose 2.3% m/m, rebounding from a negative reading in July. Final August durable goods orders grew 4.4% m/m—in line with the preliminary estimate. September nonfarm payrolls increased by 134,000, below expectations, while the unemployment rate fell to 3.7%—slightly lower than expected. September exports fell 0.8% m/m and imports rose 0.6% m/m. As of this writing, the Senate appears ready to confirm Supreme Court nominee Brett Kavanaugh in a vote scheduled for Saturday. Although this likely adds plenty to political rhetoric and media chatter ahead of midterm elections, it likely doesn’t materially affect broad, global capital markets in the near term. Importantly, most Supreme Court cases don’t have sweeping capital markets impact and most aren’t heavily divided opinions.

In the UK, the September Markit/CIPS manufacturing PMI rose to 53.8, higher than expected, while the services PMI fell to 53.9, below the forecast. The September Markit/CIPS Construction PMI fell to 52.1, lower than estimates. In the eurozone, August retail sales fell 0.2% m/m but rose 1.8% y/y. September Markit manufacturing and services PMIs came in at 53.2 and 54.7, respectively—both in line with expectations. August unemployment fell to 8.1%, slightly beating expectations.

Asian economic releases were sparse. In Japan, the September Nikkei manufacturing PMI came in at 52.5, unchanged from the previous month while the services PMI fell to 50.2, below estimates. China’s September Markit/Caixin services and manufacturing PMIs—which capture smaller businesses in the Chinese economy—fell to 50.2 and 50.0, respectively. The September official non-manufacturing PMI—including large, state-owned firms—rose to a three-month high of 54.9, slightly above expectations.

The Week Ahead:

The US releases September inflation data. The UK reports August manufacturing and industrial production and August trade figures. The eurozone posts August industrial production. Japan announces September bank lending. China releases September trade, loan growth and services 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.