Weekly Wrap-Up

Last Week In Markets: Sept 30 - Oct 04, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including US recession fears, UK GDP data and Chinese PMI numbers.

In the US, the September ISM manufacturing Purchasing Managers’ Index (PMI) fell to 47.8. (Readings under 50 indicate contraction.) The September Markit manufacturing PMI increased slightly to 51.1, while the services PMI remained at 50.9. August factory orders decreased 0.1% m/m, faring better than initial estimates. Final August durable goods orders increased 0.2% m/m, slightly below consensus expectations. The September unemployment fell to 3.5%—hitting a 50-year low. September exports fell 0.2% m/m, while imports rose 1.0% m/m. Volatility continued this week with many headlines citing weaker than expected US manufacturing data—renewing US recession fears. In our view, recession fears are largely overblown since manufacturing represents a relatively small portion of the US economy. Other indicators suggest continued growth ahead, albeit with some weak spots—normal in any economic expansion. For more, see our 10/03/2019 commentary, “Some Perspective on October’s Resurgent Economic Growth Concerns.

In the UK, the September Markit/CIPS manufacturing PMI rose to 48.3, higher than expected, while the services PMI fell to 49.5, slightly below the forecast. The third estimate of Q2 2019 GDP rose 1.3% y/y, slightly above expectations. Final Q2 2019 imports and exports decreased 13% q/q and 6.6%, respectively, both below expectations. In the eurozone, August retail sales rose 0.3% m/m. September Markit manufacturing PMIs came in at 45.7, slightly better than expected. September Markit services PMI reached 51.6, lower than expected, but still indicating expansion. The August unemployment rate remained at 7.4%, down slightly from 7.5% in July.

In China, the September Caixin manufacturing PMI rose to 51.4, beating expectations. In Japan, the September Markit manufacturing PMI remained the same from last month at 48.9. The September Markit services PMI modestly increased to 52.8. Preliminary August industrial production decreased 4.7% y/y, missing expectations. Meanwhile, August retail sales rose 2% y/y, beating expectations.

The Week Ahead:

The US releases September inflation data and trade figures. The UK reports September industrial and manufacturing production and retail sales. China releases services PMIs and loan growth figures. Japan announces updated Leading Economic Index (LEI) figures and September bank lending.

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.