Weekly Wrap-Up

Last Week In Markets: Sept 28 - Oct 02 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US and UK Q2 GDP figures, the eurozone’s August unemployment details and Japanese September trade data.

In the US, the third estimate of Q2 2020 GDP was -31.4% annualized, improving slightly from the second estimate. The September Markit Manufacturing Purchasing Managers’ Index (PMI) increased slightly to 53.2 (readings over 50 indicate expansion)—in line with expectations. August durable goods orders rose 0.5% m/m, surpassing expectations. In September, the US economy added 661,000 jobs and the unemployment fell from 8.4% to 7.9%. On Tuesday, the first US presidential debate took place—garnering plenty of attention. However, in our view, debates don’t help investors assess the election’s outcome or its influence on stocks—and they typically have little bearing on markets other than potentially introducing bouts of short-term volatility. For more, please see our 9/30/2020 article, “The Big Picture for Investors on the Debates.” On Thursday evening, President Trump and First Lady Melania Trump tested positive for COVID-19 and started quarantine. While this introduces another variable into the presidential election and increases short-term uncertainty, it’s too soon to know whether this will materially affect the election outcome or President Trump’s ability to fulfill the duties of office. In our view, investors should remain patient and avoid making knee-jerk investment decisions based on speculation. For more, please see our 10/2/2020 commentary, "On Trump’s Positive COVID Test.”

In the eurozone, the August unemployment rate ticked up to 8.1%, in line with expectations. September’s final Markit Manufacturing PMI increased to 53.7, matching the preliminary estimate. In the UK, the second estimate of Q2 GDP showed a contraction of 21.5% y/y—slightly less than the first estimate. The September Markit/CIPS Manufacturing PMI came in at 54.1—in line with expectations. In Q2, imports and exports declined 22.7% q/q and 11.0% q/q, respectively. August money supply (M4) rose 12.1% y/y but fell 0.4% m/m.

In Japan, The September Jibun Bank Manufacturing PMI modestly increased to 47.7. September core-core consumer prices (excluding food and energy) fell 0.2% y/y, slightly less than estimated. August imports and exports declined 20.8% and 14.8%, respectively—in line with forecasts. August preliminary industrial production fell 13.3% y/y, showing a modest improvement from the prior reading. August retail sales decreased 1.9% y/y, beating analyst expectations. The August unemployment rate rose slightly to 3.0%, in line with forecasts. China’s official September manufacturing and non-manufacturing PMIs, came in at 51.5 and 55.9, respectively. September’s Markit/Caixin Manufacturing PMI (a measure of overall manufacturing activity including small businesses) was 53.0—in line with expectations.

The Week Ahead:

The US, eurozone, UK, Japan and China all report September Markit Services PMI readings. The eurozone releases August retail sales data. The UK reports August industrial and manufacturing production figures. China announces September bank 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.