Fisher Investments recaps the biggest market, political and economic news from last week, including US GDP growth, ISM and Markit Purchasing Manager’s Indexes and eurozone money supply growth.
Global equities rose 1.3% amid generally positive economic data releases and further Brexit developments. In the US, the first estimate of Q3 2019 GDP growth was revised down to 1.9% q/q, although remained higher than expected. The October Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.3, beating estimates. The October ISM Manufacturing PMI rose to 48.3, lower than forecast. (PMI readings above 50 indicate expansion.) On Wednesday, the Fed lowered its fed-funds target range to 1.5% - 1.75%—the third rate cut this year. While many in the media are focusing on trying to guess future Fed decisions, we believe this economic expansion and bull market can continue on with or without further rate cuts.
In the eurozone, the first estimate of Q3 2019 GDP showed 1.1% y/y growth, meeting expectations. September money supply (M3) and lending grew 5.5% and 3.4% y/y, respectively—roughly in line with forecasts. October flash core consumer prices (excluding food, energy, alcohol and tobacco) rose 1.1% y/y, matching consensus. All of these figures reflect an economy much better than most people expect or appreciate. In the UK, the October Markit/CIPS Manufacturing PMI rose to 49.6, higher than expected. In politics, parliament passed a resolution to hold new general elections on December 12. Based on recent polling, no single party appears in a position to win an outright majority. Once again, uncertainty prevails and multiple outcomes remain possible. For more, please see our 10/31/2019 commentary, “Today in Brexit, Day 1,224.”
In Asia, the final Japanese October Markit/Jibun Bank Manufacturing PMI rose to 49.6, higher than forecast. The Bank of Japan left interest rates unchanged. In China, the Markit/Caixin Manufacturing PMI rose to 51.7, exceeding expectations. The official October manufacturing and non-manufacturing PMI surveys, including large, state-owned firms, came in at 49.3 and 52.8, respectively.
The Week Ahead:
The US releases the final Markit October services PMI. The eurozone announces October services and composite PMIs and September retail sales. The UK posts October retail sales and the Bank of England meets to set monetary policy. The Conference Board announces Japan’s September Leading Economic Index (LEI) reading. China releases October trade and lending 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.