The Monday note - 27 February 2017

• The FTSE 100 index declined by 56 points last week to close on Friday at 7,243.7, as investors took profits after the steady gains recorded in recent weeks. Ten year Gilt yields hardened to 1.08%, as investors favoured safe haven bonds due to political uncertainty in Europe. 
• UK GDP growth for Q4 2016 was revised upwards from 0.6% to 0.7%, thanks to a rebound in manufacturing output. However, business investment fell during the quarter, suggesting firms are cautious and avoiding additional spending. 
• Amazon said it plans to create 5,000 new jobs in the UK, ranging from software development to customer services to warehouse roles. The announcement extends a run of US tech firms pledging to expand in Britain since the vote to leave the EU, including Apple and Facebook. 
• The German government’s budget surplus hit €23.7 billion in 2016, marking a third consecutive year of tax income exceeding spending. This is the highest surplus recorded by Germany since reunification in 1990. 

Chief Economist comments: 

"Political uncertainty is high on investors’ minds presently. Marine Le Pen’s strength in the polls is unnerving some, although the National Front leader now faces an investigation over pay made to her staff. A similar scandal recently derailed the campaign of a conservative presidential candidate, Francois Fillon. Beyond Le Pen though, there is plenty more on the political risk radar to worry investors, including Greece, Trump, the Dutch election, and Brexit. However, Amazon’s expansion plans remind us that some businesses are thinking long-term, particularly those in the tech sector. Life goes on."