Markets finishing week on positive note as FTSE climbs

Added 3rd June 2016

Markets are ending the week on a positive note as the FTSE 100 climbed close to 1% in morning trading.

Markets finishing week on positive note as FTSE climbs

The FTSE 250 followed suit rising 0.4% on Friday, while the Stoxx Europe 600 put on 0.6%.

The United Kingdom’s crucial service sector picking up was a key reason for the relatively positive sentiment.

Markit’s service sector PMI headline figure for May ticked up to 53.5 from April’s 38-month low of 52.3. This was still regarded as representing "weak growth" by Markit however.

The rise in total activity in May also occurred despite new business growing at the slowest rate of the current 41-month sequence of expansion, Markit said.

“The PMI surveys show that the pace of economic growth remained subdued in May, as ‘Brexit’ worries exacerbated existing headwinds. The data so far indicate that the second quarter is likely to see the economy grow by just 0.2%,” said chief economist Chris Williamson. “Growth has collapsed in manufacturing and construction, leaving the economy dependent on the service sector to sustain the upturn, though even here the pace of expansion has remained frustratingly weak so far this year."

“Trends in employment and order books also deteriorated further across the economy in May, hinting at the possibility that the pace of growth could weaken again in June especially as the EU referendum draws closer,” Williamson added.

“A small improvement in sentiment among the UK’s service industry provides some grounds for believing the nation’s economy is not stalling but the widening gap between services and manufacturing suggests Chancellor of the Exchequer George Osborne has a long way to go if he is to realise his ambition of rebalancing how Britain generates its output,” noted Russ Mould, investment director at AJ Bell.

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Alex Sebastian

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Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.



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