Global stocks rose, while the impact of North American natural disasters and North Korean geopolitical tensions continue to garner media attention.
In the US, August core CPI inflation (excluding food and energy) came in slightly above expectations—1.7% y/y vs. 1.6% y/y. August industrial and manufacturing production fell 0.9% m/m and 0.3% m/m, respectively. August retail sales fell 0.2% m/m, missing estimates. On the geopolitical front, the five member United Nations Security Council unanimously passed new sanctions on North Korea, prompting more saber rattling from Pyongyang. We continue to monitor the situation closely. For more, see Ken’s latest Financial Times article, “Should markets be more worried about North Korea?”
European reports were mixed. August UK inflation rose 2.9% y/y, up from July’s 2.6%, sparking speculation the Bank of England would move sooner than expected to raise interest rates. In Brexit news, the UK Parliament approved a draft of the “EU Withdrawal Bill” that would, once finalized, remove the UK from the EU. However, all other EU states must ratify the final Brexit agreement between the UK and EU leadership. The next round of negotiations is scheduled for the end of September—more evidence of a slow and deliberate process. The Bank of England kept its benchmark short-term rate unchanged at 0.25%. Eurozone July industrial production met expectations, growing 0.1% m/m. August German, French, Spanish and Italian inflation figures all met expectations.
In Asia, China released a flurry of economic data: August retail sales grew 10.1% y/y, but were down from July’s 10.4% y/y. August lending rose 13.2% and July industrial output grew 6.0% y/y. Japanese data disappointed. July retail sales were up 1.8% y/y, slightly missing expectations. July industrial production fell 0.8% m/m.
The US releases the August Leading Economic Index, new home sales and housing starts. The eurozone announces August inflation and France releases Q2 2017 GDP. The Fed and Bank of Japan hold their respective monetary meetings on Wednesday. All eyes will be on the Fed as investors look for details on unwinding their balance sheet. For more on the Fed’s upcoming meeting, see our MarketMinder.com article, “Minding the Fed’s (Possible) Unwinding.”
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.