Euro Stocks Hit New Highs on UK Election and Trade Deal News

LONDON, U.K. – Shares in the euro stock market is trading positively on Monday, reaching new highs since years ago.

With the grim latest PMI survey, the city has responded rather positively as it drives share prices even higher during the first day of the trading week. The benchmark FTSE 100 index has already recorded a hefty sum, a 2.1% increase early on Monday. The index is jumping around 157 points, which marks the biggest gains for the index in a day since June 29,2016.

The PMI survey released today was conducted way before the UK’s general election last week and is showing a slump in the country’s business activity this month.

According to the group director at the Chartered Institute of Procurement and Supply, Duncan Brock, the major factor of the recent investment slump is the increasing anxiety about Brexit as well as the pre-election.

He said that the continuing aversion to investments in the market related to Brexit and the lack of confidence in consumers before the election brought December’s business activity to its lowest rate since July 2016.

Brock further stated that the most shocking in the decline is the worsening output of the manufacturing sector, which has already started its downtrend since July 2012.  The unraveling of inventories pre-Brexit didn’t help with the progress in the sector, and the drop in purchasing by supply chain managers was another factor as well, said Brock.

Brock, however, also said that with the general election over and done with, it should offer companies a clearer view of the future of the UK, although he warns that Brexit wouldn’t be easy for the market.

The chief business economist at the IHS Markit, Christ Williamson, also voiced his fears about the recent weak PMI report. He said that with the worst numbers on PMI data, it could be a real possibility that Britain will experience another recession.

The shrinking PMI in the UK went down largely as services firms and factories start to struggle. The private sector in Britain is also continuing this month with a shrinking trend.

The Flash UK composite index of the Data firm Markit that is used to track the activities within the sector, has recorded a 48.5 points decline for December. The drop is worse than the 49.3 points from November, marking its worst reading since three and a half years ago.

Any data that goes below 50 already suggests a contraction, so the UK economy is expected to shrink this month, as it has been shrinking over the last quarter.