Last Week In Markets: Feb 27 - Mar 03, 2017

Fisher Investments recaps the biggest market, economic and political news from last week, including US GDP, UK PMIs and global manufacturing data.

Global equities ended 0.5% higher amid widespread positive economic data.

US markets digested abundant central bank chatter and President Trump’s first address to Congress. Beyond all the talk, economic data were largely positive, reflecting a broadly healthy economy. The second revision of Q4 2016 GDP was unchanged—the US economy grew at 1.9% (annualized), as high consumer spending and vehicle sales offset slowing government purchases. February manufacturing data were positive with broad growth across Purchasing Managers’ Indexes (PMIs). The Institute for Supply Management’s (ISM) manufacturing PMI rose to a multi-year high at 57.7, beating estimates (readings over 50 signal growth). ISM’s non-manufacturing PMI also bested forecasts at 57.6 based on strong orders and broad business activity. Pending home sales slowed modestly in January (-2.8% m/m), likely due to tight housing supplies. January construction spending fell on slowing federal spending (-7.4% y/y), but the release also reflected strong demand for housing: Multi-family construction rose 9% y/y and single family units rose 2.3% y/y. US labor markets remain healthy, weekly jobless claims fell more than forecast to levels last seen in the early 1970s.

European manufacturing strength echoed US gains. French, German and eurozone PMIs remained expansionary in February. A strengthening economy drove positive inflation data across the eurozone. January producer prices rose 3.5% y/y and February consumer prices rose 2% y/y. Strong German labor markets pushed unemployment below 6%, levels not seen since the country’s reunification. UK data were mixed but remained broadly positive—February home prices rose 4.5% y/y, construction PMI rose ahead of expectations, the UK’s services and manufacturing PMIs slowed, but continued to signal growth.

February Chinese manufacturing expanded on strong domestic and overseas orders, surprising forecasters’ expectations for a slowdown. February non-manufacturing PMI showed continued growth as well. Japanese data were positive. January consumer prices rose 0.4% y/y, cooling deflationary fears. Japan’s January manufacturing PMI continued expanding, housing starts rose 12.8% y/y (sharply ahead of the 3.2% forecast), retail sales were modestly ahead of estimates and unemployment fell to 3%.

The Week Ahead:

US economic data are light, January factory orders and February employment reports likely take center stage. China releases February inflation and trade data, while Japan reports Q4 GDP and February machinery orders. The eurozone posts Q4 GDP and the ECB releases a monetary policy announcement. For more updates on market events, please visit www.MarketMinder.com.

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 a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.

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