Fisher Investments Reviews: Last Week in Markets—September 18– September 22

In the US, the September flash S&P Global US Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 48.9 and 50.2, respectively. PMI readings above 50 indicate expansion. The Conference Board’s Leading Economic Index fell 0.4% m/m in August—in line with expectations. On Wednesday, the Federal Reserve left the fed-funds target range unchanged at 5.25% – 5.5%. While some headlines were terming the latest Fed news as a “hawkish pause” amidst concerns about “higher for longer” fed-funds rate projections while others worry absent more Fed cuts, tighter credit could choke the economy, bringing tough times for earnings and stocks. But if higher rates haven’t yet deterred markets, we have a hard time seeing why strong returns from here would suddenly hinge on massive rate cuts. For more, please see our 9/20/2023 commentary, “Pessimism and the Fed’s ‘Hawkish’ or ‘Careful’ Pause.”

In the eurozone, the September flash HCOB eurozone Manufacturing and Services PMIs were 43.4 and 48.4—manufacturing missed forecasts while services was higher than expected. August consumer prices rose 5.2% y/y while core consumer prices (excluding energy, food, alcohol and tobacco) increased 5.3% y/y. In the UK, the September flash S&P Global/CIPS UK Manufacturing and Services PMIs were 44.2 and 47.2, respectively—manufacturing exceeded forecasts while services was lower than expected. August retail sales increased 0.4% m/m while falling 1.4% y/y. August consumer prices rose 6.7% y/y while core consumer prices (excluding food and energy) increased 6.2% y/y, both below estimates. The Bank of England kept its official bank rate at 5.25%, which is the first pause since policy tightening began in December 2021.

In Japan, the September flash Jibun Bank Manufacturing and Services PMIs were to 48.6 and 53.3, respectively. Preliminary August exports fell 0.8 % y/y while imports declined 17.8% y/y. August consumer prices rose 3.2% y/y while core-core consumer prices (excluding fresh food and energy) increased 4.3% y/y. The Bank of Japan kept its key short-term interest rate target at -0.1%.

The Week Ahead:

The US releases its third estimate of Q2 2023 GDP, while the UK releases its second estimate of Q2 2023 GDP. China reports September Manufacturing and Services Purchasing Managers’ Indexes (PMIs). The UK and eurozone reports August money supply data. The eurozone announces September consumer prices. The US releases August durable goods data, while Japan releases August retail sales, unemployment and industrial production.

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.