Last Week In Markets: Nov 21-25, 2016
Global equity markets’ post-election rally continued during the holiday-shortened week, rising 1.4%. Interest rates rose as the Fed signaled it could hike rates “relatively soon,” which many observers interpreted as December. After initially surging on expectations of production cuts, oil prices retreated as OPEC failed to arrange lower production targets among cartel members.
US economic releases reflected a broadly expanding economy as housing, manufacturing and service sectors grew faster than expected. September home prices rose 6.1% y/y and October housing data were similarly robust—existing home sales grew 5.9% y/y, as tight supply and strong demand drove down houses’ average time on the market by 28% y/y. October new home sales fell slightly (-1.9% y/y), though remain robust on year-to-date basis (+17.8% y/y). October durable goods orders grew 4.8% m/m on strong demand for non-defense aircraft and core capital goods, surprising forecasters. Weekly jobless claims rose modestly, though remain near cycle lows reflecting broad labor market strength. Markit’s flash November Purchasing Managers’ Indexes (PMI) in manufacturing and services were firmly expansionary, underpinned by rising new orders.
UK economic data continued showing a healthy economy, shaking off post-Brexit fears. The second estimate of Q3 GDP confirmed the initial read of 0.5% q/q (2.3% y/y). Also, UK business investment rose faster than expected in the third quarter, up 0.9% q/q. Eurozone November flash PMIs were at their highest level in 11 months, as Germany held recent gains and France’s services sector drove faster-than-expected economic expansion.
China reported little economic data. Japan’s data were mixed: October imports and exports fell much faster than expected (-16.5% y/y and -10.3% y/y, respectively)—with exports falling for the 13th consecutive month. November’s manufacturing PMI remained expansionary at 51.1, but missed estimates of 51.7.
The Week Ahead: Fed officials will likely grab headlines next week given a heavy speaking schedule. US economic releases include the Institute for Supply Management’s PMI data, construction spending, pending home sales and Friday’s employment report. Many investors likely focus on initial holiday shopping trends, though we caution against giving any single data point too much credence. The UK posts manufacturing and construction PMIs, housing prices and money supply, while the eurozone reports producer prices and unemployment. Japan releases retail sales, household spending and industrial production and China releases its PMIs.
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.