Fisher Investments recaps the biggest market, political and economic news from last week, including the first US Q3 2022 GDP estimate, UK October PMIs, and Japan’s October trade data.
In the US, preliminary September durable goods orders rose 0.4% m/m, less than forecast. The October S&P Global Flash Manufacturing and Services Purchasing Managers’ Indexes (PMIs) fell to 49.9 and 46.6, respectively—both lower than expected. Readings over 50 indicate expansion. The first estimate of Q3 2022 GDP showed a 2.6% annualized expansion, slightly above expectations and following two shallow US GDP contractions in the first half of the year. While not uniformly rosy, we believe the underlying components of this week’s positive US GDP reading help illustrate the largely mixed state of the US economy. Stocks don’t need perfect conditions to mount a recovery—all they need is a reality that goes a little better than feared. For more, please see our 10/27/2022 commentary, “What Recent Data Suggest About America’s Economy.”
In the UK, the October S&P Global Flash Manufacturing and Services PMIs were lower than expected—coming in at 45.8 and 47.5, respectively. On Monday, the Conservative Party selected former Chancellor of the Exchequer Rishi Sunak as their new leader and, on Tuesday, he was installed as Prime Minister. In the eurozone, the October S&P Global Flash Manufacturing and Services PMIs fell to 46.6 and 48.2, respectively. September money supply (M3) grew 6.3% y/y, slightly more than forecast. The European Central Bank (ECB) raised its key policy rate by 75 basis points—bringing its deposit facility rate up to 1.50%, following a similar move in September. The announcement was met with little fanfare as markets likely already anticipated this ECB action, blunting its potential surprise power.
In Japan, the October Jibun Bank Flash Manufacturing PMI fell slightly to 50.7, but less than expected. September imports and exports rose 46.0% y/y and 28.9% y/y, respectively. The September unemployment rate was 2.6%, slightly higher than expected. In China, September imports and exports rose 0.3% y/y and 5.7% y/y, respectively.
The Week Ahead:
The US, UK, eurozone, Japan and China announce October purchasing managers’ index (PMI) readings. The US reports the October unemployment rate, nonfarm payrolls and September trade data. The eurozone reports September unemployment data, October consumer prices and its first estimate of Q3 2022 GDP. The Bank of England meets to set monetary policy.
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.