New Year Surprise to UK Manufacturing PMIs

Tuesday, 3 January: The first economic data release of 2017 in the UK came in the shape of manufacturing PMIs. The purchasing managers index reading rose to 56.1 in December (from 53.6 in the prior month) and is the highest reading since June 2014. Both domestic and overseas demand grew with the latter being boosted by sterling’s weakening in the months following the UK’s decision to leave the EU. Sterling initially rose against both the dollar and euro following the data release but pared back to trade lower on the day. At the time of writing GBP/USD is -0.22% at $1.22.

After finishing 2016 at record highs, the FTSE 100 continued to drive forward, subsequently hitting new record highs as the opening bell rang. Financials and miners led the pack with the former benefitting from the decision by global regulators to delay signing off on new bank recapitalisation rules. The first podium winners of 2017 were Hargreaves Lansdown (+5.03%), Barclays (+3.78%) and Fresnillo (+3.69%).

As negotiations for the UK to leave the EU look set to take place in 2017, a rather larger spanner has been thrown in to the mix as Britain’s ambassador to the European Union today resigned. Sir Ivan Rogers was appointed to the job by former PM David Cameron in 2013 and had been expected to play a key role in Brexit talks, which are expected to start within the coming months. He has given no immediate reason for his resignation but the Government have said he quit so a successor could be in place before Brexit negotiations begin.

At the close European indices were up with the FTSE 100 +0.5%, the CAC 40 +1.3%, and the DAX +1.2%. In the US the Dow Jones is currently higher by 0.2% and the S&P 500 +0.4%.