Weekly Wrap-Up

Last Week In Markets: Sept 17 - Sept 21, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including eurozone inflation, Japan trade data, and US-China tariff talks.

Global equities rose while headlines focused on US politics and the latest round of tariffs between the US and China. In the US, economic reports were sparse but generally positive. The Leading Economic Index increased 0.4% m/m in August, slightly below expectations, but remains high and rising. The September services and manufacturing Flash Purchasing Managers’ Indexes (PMIs) continued to indicate expansion with readings of 55.6 and 52.9, respectively. On Monday, the Trump administration announced previously discussed tariffs on $200 billion in additional Chinese imports will take effect on September 24, with the rate starting at 10% and rising to 25% by year-end. In response, Chinese officials announced their long-discussed retaliatory tariffs on $60 billion in additional US imports will take effect the same day, with rates of 5% and 10%. In our view, though rising trade barriers are a negative, what matters most for markets is the surprise factor—and there is next to no surprise power in these announcements. Moreover, even with this escalation, total tariffs remain small compared to US, Chinese and global GDP. For more commentary on tariffs and trade, see our 09/21/2018 MarketMinder.com article, “Tariffs’ Bark Remains Worse Than Their Bite.”

In Europe, data releases were mostly positive. The September eurozone Markit manufacturing Flash PMI fell to 53.3, while the services PMI rose to 54.7. Both still indicate growth ahead. August eurozone core consumer prices (excluding food, energy, alcohol and tobacco) rose 1.0% y/y, in line with expectations. In the UK, August retail sales increased to 3.5% y/y, beating expectations and accelerating from July. August core consumer prices (excluding food and energy) rose 2.1% y/y, above expectations.

In Asia, Japan’s Markit manufacturing Flash PMI rose to 52.9, below expectations. August import and export values increased 15.4% and 6.6% y/y, respectively—both beating expectations. Finally, the Bank of Japan left interest rates unchanged.

The Week Ahead:

The US and UK both release third estimates for Q2 2018 GDP. The US also reports August durable goods order and new home sales. The eurozone posts August money supply and loan growth. In Asia, Japan announces August retail sales and unemployment. China reports September manufacturing PMI.

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.