Last Week In Markets: May 1- May 5 2023

In the US, the final April S&P Global Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 50.2 and 53.6, respectively (readings over 50 indicate expansion). April nonfarm payrolls increased by 253,000, exceeding expectations. The April unemployment rate fell from 3.5% to 3.4%, lower than anticipated. March imports fell 0.3% y/y while exports rose 2.1% y/y. On Wednesday, the Federal Reserve announced a 25 basis point rate hike, bringing the fed-funds target range to 5% – 5.25%. Whether this hike is the last as some suspect, or the Fed keeps hiking, we doubt it means much for stocks. While rate hikes likely did contribute to investor pessimism that weighed on markets last year, global stocks are up around 20% since October—all while the Fed has raised rates by 200 basis points. We believe this demonstrates stocks’ resilience and ability to get over widespread fears. For more, please see our 5/3/2023 commentary, “The Fed Hikes Again, But the Thrill is Gone.”

In the eurozone, the final April HCOB Manufacturing PMI was 45.8 while the Services PMI was 56.2. April flash consumer prices increased 7.0% y/y, while flash core consumer prices (excluding energy, food, alcohol and tobacco) rose 5.6% y/y. March money supply (M3) expanded 2.5% y/y. The March unemployment rate fell from 6.6% to 6.5%, better than expected. March retail sales decreased 3.8% y/y. On Thursday, the European Central Bank raised its policy rate by 25 basis points. In the UK, the final April S&P Global/CIPS Manufacturing PMI was 47.8 while the Services PMI was 55.9—both higher than anticipated. March money supply (M4) increased 0.4% y/y, lower than last month’s report.

In Japan, the final April Jibun Bank Manufacturing PMI was unchanged from the initial reading at 49.5. In China, the April Caixin Manufacturing and Services PMIs—which include smaller businesses—were 49.5 and 56.4, respectively.

The Week Ahead:

The US and China release April inflation data. The UK releases its first Q1 2023 GDP reading as well as March industrial and manufacturing production figures. The Bank of England meets to set monetary policy. China reports April trade data and loan growth. Japan releases its final April services PMI. China and Japan also report April money supply (M2) 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.