Last Week In Markets: Jan 2 -6, 2017
Fisher Investments recaps the biggest market, economic and political news from last week, including US, European, Japanese and Chinese economic releases.
Stocks cheered better than expected global economic data in a holiday shortened week of trading, rising 2.1%.
US economic data remain positive. Weekly jobless claims decreased to 235,000—better than predicted and characteristic of a strong labor market as claims hover around a four decade low. The December employment report showed a 156,000 increase in payrolls —a decrease from November. With more Americans entering the labor force, the unemployment rate rose slightly higher to 4.7% as expected. Average hourly earnings rose 0.4% m/m and 2.9% for the year—showing a tightening labor market and the largest yearly gain since 2009.
November factory orders fell 2.4% m/m, while October orders were revised higher into positive territory. Mortgage applications edged 0.1% higher last week after a sharp contraction in the prior week. Construction spending grew 0.9% m/m in November, reaching a ten year high. The trade deficit grew modestly in November, as anticipated, as exports declined from October. December’s Manufacturing Purchasing Managers Index (PMI) improved from November and remains indicative of a healthy economy. The Non-Manufacturing PMI—representing a far larger portion of the US economy—remains firmly expansionary.
European economic data were light, highlighted by German factory orders missing expectations in November—reversing course after a robust +5% m/m October reading. November German retail sales climbed 3.2% y/y. The UK services PMI eclipsed a 12 month high, while the manufacturing PMI reading was the highest in over two years—further suggesting fears of a post-Brexit slowdown were overdone.
Chinese official December manufacturing and services PMI data came in slightly below forecasts. Despite the miss, the readings remain consistent with continuing growth in the world’s second largest economy and the gradual economic pivot towards services.
The Week Ahead:
Economic data will be relatively sparse. December US data include retail sales and wholesale inventories. China releases December lending, inflation, money supply and trade figures. UK, France, Italy and Germany release November industrial production. The Bank of England will review interest rates during its monetary policy meeting.
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.