The Monday note - 10 April 2017
The FTSE 100 edged up 26 points last week, thanks to upbeat data on the UK services sector, to close on Friday at 7,349.4
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- The FTSE 100 edged up 26 points last week, thanks to upbeat data on the UK services sector, to close on Friday at 7,349.4. Ten year Gilt yields hardened to 1.08%.
- Prime Minister Theresa May indicated that free movement of labour between the UK and the EU could continue for a transition period after Brexit. The comment is being seen as a step towards a compromise deal with the EU.
- The US economy added just 98,000 jobs in March, which was significantly lower than the consensus forecast figure of 180,000. Nevertheless, unemployment fell to just 4.5%.
- The PMI UK services business activity index read at 55.0 in March, up from 53.3 in February – a reading of over 50.0 indicates growth. The index averaged 54.3 in Q1 2017, which bodes well for the GDP figures.
Chief Economist comments:
After all the tough talk about “Brexit means Brexit”, the UK government is hinting to the EU that it is willing to compromise. On the table is a transition deal that continues the broad conditions of EU membership come April 2019, to bridge the gap to a future trade deal. It is too easy to imagine that future trade deal (which I suspect we get to see after the 2020 general election) will not look much different to being in the EU. In short: “Brexit means no real change”. Time to get back to business.