Whatâs Going On Here?The UK and Europe had better watch out: their respective business activity surveys didnât show anything nice on Monday, and â wait, let us just check âem twice⊠yep, both places will be on Santaâs naughty list this Christmas. What Does This Mean?Activity in the UKâs manufacturing sector slowed sharply ahead of last weekâs election, as uncertainty continued to weigh on the countryâs businesses. And with factory production suffering its worst month in over seven years, speculationâs now rife that the economy as a whole might contract this quarter. There are reasons for businesses to be hopeful, mind you: the prime ministerâs definitive win could provide the certainty theyâve all been craving.
In Europe, meanwhile, manufacturing activity fell for the eleventh straight month as the US-China trade war and a weak economy continued to take their toll. Germany didnât do it any favors: the blocâs largest manufacturing producer suffered a worse-than-expected drop in activity, given its struggling auto industry and significant exposure to global trade tensions. Why Should I Care?For markets: Better not cry.
Bleak data or no bleak data, European stocks hit an all-time high on Monday. Perhaps overshadowing the manufacturing survey â backward-looking by definition â was the trade-war truce struck over the weekend, which mightâve raised hopes for Europeâs factories. And with the UK election bringing some much-needed clarity to proceedings (Brexit really might mean Brexit this time), the regionâs markets had even more reason to celebrate on Monday.
Zooming out: Better not pout.
China was in the Christmas spirit over the weekend: not only could it boast a successful trade agreement, data released on Monday showed both industrial production and retail sales in November climbed more than expected. If next year sees a complete trade deal that lifts tariffs on even more Chinese goods, itâd go some way to dispelling the gloom thatâs long been hanging over the worldâs second-largest economy. | 