Fisher Investments Reviews: Last Week in Markets—July 24 – July 28

In the US, the flash July S&P Global Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 49.0 and 52.4, respectively—manufacturing exceeded estimates while services missed estimates. PMI readings above 50 indicate expansion. June new home sales fell 2.5% m/m—less than expected. June durable goods orders rose 4.7% m/m, much higher than expected. The first estimate of Q2 2023 GDP showed 2.4% annualized growth—exceeding forecasts. On Wednesday, the Federal Reserve announced a 25 basis point rate hike, bringing the fed-funds target range to 5.25% – 5.5%. The financial world had seemingly already penciled in the latest hike with attention now turning to what the Fed does next. Will markets get a pause or even rate cuts, allegedly necessary to sustain recent returns? In our view, this thinking is misguided, since stocks have proven to be more resilient than expected in tightening cycles. For more, please see our 7/26/2023 commentary, “What to Make of the Fed’s Summertime Hike.”

In the eurozone, the flash July HCOB Global Manufacturing and Services PMIs were 42.7 and 51.1, respectively—both below expectations. June M3 money supply grew 0.6% y/y, lower than estimates. The European Central Bank raised interest rates by 25 basis points, matching consensus expectations and bringing their main refinancing rate to 4.25%. In the UK, the flash July S&P Global/CIPS Manufacturing and Services PMIs were 45.0 and 51.5, respectively—both missing estimates.

In Japan, the flash July Jibun Bank Manufacturing and Services PMIs fell slightly to 49.4 and 53.9, respectively. June exports rose 1.5% while imports fell 12.9% y/y—in line with expectations. The Bank of Japan kept its short-term policy rate target at -0.1%.

The Week Ahead:

The US, UK, eurozone, Japan and China report final July manufacturing and services PMIs. Japan and the eurozone release June unemployment data and retail sales, while the US reports July unemployment and nonfarm payrolls. The UK posts June money supply (M4). The eurozone reports its first estimate of Q2 2023 GDP and July consumer prices. The Bank of England meets to set monetary policy.

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.