Fisher Investments recaps the biggest market, political and economic news from last week, including US September Leading Economic Index (LEI) figures, UK October Purchasing Managers Index (PMI) readings, and Chinese Q3 GDP details.
Global equities fell as the US election remains a primary focus. In the US, the October Markit Manufacturing and Services Flash Purchasing Managers’ Indexes (PMIs) came in at 53.3 and 56.0, respectively (readings over 50 indicate expansion). The Conference Board’s Leading Economic Index (LEI) rose 0.7% m/m in September, in line with forecasts. On Thursday, President Donald Trump and former Vice President Joe Biden participated in their final presidential debate before the election. As with past debates, the event provided little additional insight into the potential outcome of the election. Regardless, following the election, we will eventually have a winner declared—whether within days or perhaps weeks—and that clarity should provide a tailwind for stocks. For more, please see our 10/20/2020 commentary, “Election Clarity: Possibly a Bit Delayed, but Still Coming Soon.”
In the eurozone, the October Markit Manufacturing Flash PMI rose to 54.4, above expectations, while the Markit Services Flash PMI fell to 46.2, below estimates. In the UK, the October Markit/CIPS Manufacturing and Services Flash PMIs fell to 53.3 and 52.3, respectively, both missing forecasts. September core consumer prices (excluding food and energy) rose 1.3% y/y. September retail sales rose 4.7% y/y, exceeding expectations.
In China, the preliminary estimate of Q3 2020 GDP showed 4.9% y/y growth, with GDP surpassing its pre-pandemic level. The news triggered comparisons between China and the West about their handling of the pandemic, but we caution investors from reading too much into these comparisons. We believe stock markets are less focused on COVID-related developments in the here and now, and are looking much further ahead. For more, please see our 10/19/2020 commentary “Chinese GDP Regains Pre-Pandemic High.” September industrial production rose 6.9% y/y, higher than forecast. September retail sales increased 3.3% y/y. In Japan, the October Jibun Bank Manufacturing and Services Flash PMIs were 48.0 and 46.6, respectively. September exports and imports fell 4.9% y/y and 17.2% y/y, respectively. September core-core consumer prices (excluding food and energy) fell 0.2% y/y, in line with analyst estimates.
The Week Ahead:
The US and eurozone report preliminary estimates of Q3 2020 GDP. The eurozone also reports September money supply (M3) and unemployment data. The UK announces September money supply (M4). Japan announces final August LEI, preliminary September industrial production and September retail sales. China reports preliminary October PMI readings. The European Central Bank and Bank of Japan meet to set their respective monetary policies.
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.