Weekly Wrap-Up

Last Week In Markets: Oct 26 - Oct 30 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US and Eurozone Q3 GDP, UK September M4 money supply, and Japanese September retail sales.

Market volatility reemerged with global equities falling amid renewed COVID-19 concerns and continued US election uncertainty. As COVID-19 cases reaccelerated in parts of Europe and the US, politicians announced new restrictions on select businesses and activities. While COVID developments are worth monitoring closely, recent restrictions are still less severe than the broad shutdowns implemented in March and April. Additionally, renewed restrictions lack the surprise power lockdowns had earlier this year—likely limiting their market impact in our view. When sudden volatility strikes, we believe the best course of action is most often to do nothing. Be patient, keep your long-term goals first in mind, steel your nerves, and don’t react. Remember market pullbacks and even corrections are normal and accepting their temporary declines goes hand in hand with reaping stocks’ long-term rewards. For more, please see our 10/29/2020 article, “The Best Asset in a Fearful Time: An Even Keel.”

Next Tuesday’s US election marks the culmination of a heated campaign season. However, the results may not be immediately clear on election night, as some states may need days or even weeks to count mail-in ballots. But once the results are known, we believe the eventual clarity will be a bullish relief for markets, no matter the outcome. For more election-related commentary, please see our 10/27/2020 article, “Election Questions From the Mailbag.” US data were light but positive. The first estimate of Q3 2020 GDP rebounded from a pandemic-driven slowdown to a 33.1% annualized growth rate, modestly ahead of expectations. September preliminary durable goods orders rose 1.9% m/m, above forecasts.

In the eurozone, the first estimate of Q3 2020 GDP showed 12.7% q/q growth, beating expectations and rebounding significantly from Q2’s -11.8% q/q contraction. September money supply (M3) grew 10.4% y/y, more than forecast The September unemployment rate held steady at 8.3%, slightly above initial estimates. Meanwhile, the European Central Bank (ECB) left monetary policy unchanged. In the UK, September money supply (M4) grew a modest 0.9% m/m, but increased 12.3% y/y.

In Japan, September retail sales fell 8.7% y/y, worse than expected. The final August Leading Economic Index (LEI) increased 1.9% m/m, lower than the initial reading. Preliminary September industrial production grew 4.0% m/m, but fell 9.0% y/y. September trade data disappointed, with imports and exports falling 17.4% y/y and 4.9% y/y, respectively. The Bank of Japan left interest rates unchanged.

The Week Ahead:

The US presidential and congressional elections occur Tuesday, November 3. We will have updated commentary on MarketMinder as news develops. As always, please feel free to call your Investment Counselor to discuss the election and our views on market implications. The US, UK, eurozone, China and Japan announce October Purchasing Manager’s Index (PMI) readings. The US releases October unemployment and the final September durable goods figures. The eurozone reports September retail sales. The Bank of England meets to set monetary policy. China reports October trade 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 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.