Last Week In Markets: Jan 30 - Feb 3 2023

In the US, the final January S&P Global Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were revised up to 46.9 and 46.8, respectively (readings below 50 indicate contraction). In January, nonfarm payrolls increased by 517,000, handily beating expectations, and the unemployment rate fell slightly to 3.4%, lower than forecast. On Wednesday, the Fed announced a 25 basis point rate hike, bringing the fed-funds rate to 4.5% – 4.75%—in line with consensus expectations. Despite the Fed’s continued rate hikes, loan growth remains strong, while inflation has continued to moderate. Although rate hikes are ongoing, they are not causing lending or the economy to freeze. Read more in our 2/1/2023 commentary, “Some Questions Worth Pondering After Yet Another Rate Hike.”

In the UK, December money supply (M4) fell 0.8% m/m. The final January S&P Global/CIPS Manufacturing and Services PMIs were revised up to 47.0 and 48.7, respectively. The Bank of England raised its benchmark interest rate by 50 basis points to 4.0%. In the eurozone, the final January S&P Global Manufacturing PMI was unchanged from the flash reading of 48.8. The final January Services PMI was revised up to 50.8. Preliminary January headline and core consumer prices rose 8.5% y/y and 5.2% y/y, respectively. The December unemployment rate was 6.6%. The European Central Bank raised its policy rate by 50 basis points to 3.0%—which follows four rate increases in 2022. The first estimate of Q4 2022 GDP was 1.9% y/y—lower than Q3’s reading, but still better than forecast. There is growing evidence the eurozone may avoid the deep recession many assumed was a foregone conclusion. Read more in our 1/31/2023 commentary, “Eurozone GDP: ‘Meh’ Tops Fears.”

In Japan, the December unemployment rate was unchanged at 2.5%. The final January Jibun Bank Manufacturing PMI was 48.9—the same as the flash reading. The final January Jibun Bank Services PMI was revised lower to 52.3. December industrial production fell 2.8% y/y. December retail sales rose 3.8% y/y, beating estimates. In China, the official January NBS Manufacturing and Services PMIs—focused on large, state-owned firms—came in at 50.1 and 54.0, respectively. The January Caixin Manufacturing PMI—which includes smaller businesses—was 49.2, below expectations. The January Caixin Services PMI was 52.9, higher than expected.

The Week Ahead:

The US reports December trade data. The UK announces its first estimate of Q4 2022 GDP, Q4 2022 trade data and December industrial production. The eurozone releases December retail sales. Japan and China release January M2 money supply and China releases January consumer prices.

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.