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In stark contrast with ongoing economic turmoil in several European economies, the economic situation in the US appears to be having rather positive effects on UK stock markets of late. This has largely been due to upward trends that have been witnessed with respect to US services and labor figures.
There have been notable increases in America’s Automatic Data Processing (ADP) non-farm payrolls. Likewise, the country’s Institute for Supply Management (ISM) non-manufacturing purchasing managers’ index (PMI) is soaring as well. This is certainly good news in the face of recorded falls in non-manufacturing purchasing managers’ indexes from both China and the UK. And as can reasonably be expected, these upward trends are having an exceedingly positive impact on market sentiment in UK stock markets. As a matter of fact, there have been resulting increases in stock valuations and stock benchmark gains.
On a general note, strong manufacturing data emanating from the American economy suggest that the world’s largest economy could sport performances that far surpass many experts’ expectations in the months to come; and this will ultimately prove to be good news for UK stock markets as well as US stock markets, seeing as a large number of US-based companies are listed on the London Stock Exchange as well.
Prior to this fortunate twist of events in the US, it certainly has not been all “sunshine and roses” for the world power’s economy. In fact, not too long ago, global stock markets, UK stock markets inclusive, witnessed terrible lows in the face of gloomy US forecasts. A few months back, the US labor department announced disappointing jobless figures. Economic reports from the region were also dismal as they largely suggested slowdowns in the country’s overall manufacturing rate. Therefore, recent events have evidently been a huge source of relief for UK-listed stock investors and global investors at large.
Furthermore, moves to pump more money into the American economy on the part of the US government have also resulted in attendant rises and improvements with respect to securities in UK stock markets and other global stock markets. Specifically speaking, UK indexes rose by as much as 1.5% in response to the US federal government’s stimulus plan. This notable increase directly followed the US government’s decision to inject up to $40 billion into the US economy.
In spite of all this however, the aforementioned positive implications of the ripple effect from the US economy spilling into UK stock markets, are in danger of being undermined by investors’ responses or reactions to fears and concerns over the possibility of Spain requesting for an additional bailout package from international communities in the near future, and consistent denials with respect to this made by the Spanish prime minister, Mariano Rajoy.
