Global equities ended the week 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. French, German and eurozone PMIs remained expansionary in February.
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. 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%.
In 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.