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Weekly Economy Update

By Surrenden Invest | September 13, 2016

Last week the FTSE 100 opened at 6,894.6, which was up by almost 57 points on the previous week. Positive reports from UK manufacturing has boosted confidence. Ten year Gilt yields softened to 0.72%.

The August PMI index for UK manufacturing is indicating future growth, as it has passed the 50 mark, rising from 48.3 in July to 53.3 in August. A similar trend has been seen in the UK Services PMI index, which reached 52.9 in August, up from 47.4 in July.

The emerging markets have seen a slowdown, with Nigeria’s economy falling into a recession – their economy has experienced a contraction of 2.1% in the year to June 2016. Brazil’s GDP also fell, with a drop of 3.8% in the last year.

Autumn is fast approaching and the expected economic fallout of Brexit has not really materialised as expected. While this is indeed encouraging, Brexit is still very much in the pipeline and the future is still uncertain. It is likely that the press will once again be full of negative news regarding Brexit in the New Year, and this could well impact the markets.

It is important to note that Brexit has not derailed the UK economy and the UK is in talks with the EU. At the moment, the UK government pays less to borrow than Italy, which will leave other Eurozone voters wondering why they too should remain in the EU. We are expecting to see similar referendums in France, The Netherlands, Germany, and possibly Spain.

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