Global equities fell modestly amid generally positive economic data and persistent political chatter. US economic data were largely positive. Trade picked up in January as exports and imports climbed, while February nonfarm payrolls handily beat expectations. House Republicans unveiled legislation to replace the Affordable Care Act, but it remains too early to project potential market impact as the bill may be significantly altered or supplanted during the legislative process. European economic data were mixed but continue to show positive momentum.
The third and final estimate of Q4 2016 eurozone GDP confirmed 1.7% y/y growth—the 15th consecutive quarter of expansion.
In Asia, China’s annual National People’s Congress confirmed expectations for most 2017 economic targets—specifically, 6.5% GDP growth. South Korea’s Constitutional Court permanently removed Park Geun-hye as president amid corruption charges. By law, the country must now elect a new president within 60 days.
In the week ahead, the US releases employment data, the Fed and Bank of England meet to determine their countries’ respective monetary policies, and the Netherlands holds Parliamentary elections. As the election passes, expect falling uncertainty to broadly benefit global stocks regardless of the outcome.
Global equities ended higher, shrugging off central banker chatter, Italian referendum results, and the impeachment of South Korea’s president, while embracing improved economic data and post-US election sentiment. US economic releases broadly beat expectations. The ISM’s November composite Purchasing Manager’s Index (PMI) rose to 57.2—the highest this year—as stronger business activity, robust new orders and solid export orders exceeded forecasts.
UK data were mixed yet sparse, pausing from the spate of robust post-Brexit releases. October industrial production fell 1.1% y/y and manufacturing production fell 0.4% y/y, both modestly missing forecasts.
Italian Prime Minister Matteo Renzi announced his resignation following Sunday’s referendum on political reform, in which Italian voters chose to maintain the status quo. Markets mostly shrugged as the outcome was widely expected.
Chinese November exports and imports exceeded expectations, rising 0.1% y/y and 6.7% y/y respectively—the first positive reading for both since late 2014. Imports rose as domestic infrastructure and housing drove demand, while improved trade with the US, Japan and eurozone drove outsized export gains.
The eurozone releases consumer prices and industrial production data. The UK reports consumer prices and retail sales. The US releases consumer prices, producer prices, retail sales and industrial production data. China releases industrial production, retail sales and fixed asset investment results. Lastly, Japan releases October machinery data.