After ending 2016 with an impressive last-minute performance, European stock markets open higher during the thin holiday trading on Monday.
Majority of the stock indices in the European market experienced a continuing rally during the trading hours of the first session of 2017. The Stoxx Europe 600 climbed 0.5%, French CAC 40 rose by 0.4%, and Germany’s DAX 30 rose 1%, while the British FTSE 100 opened 0.7% higher, with a record high of 7,205.21 points. The FTSE opened a day later was closed in the previous session for a holiday.
Among the top gainers in the Stoxx Index were banking stocks Credit Suisse and Bank of Ireland, with an increase of 1.3% in the European banking index.
Italian banks loss almost 38% in 2016 due to investors uncertain with the country’s bad loans. However, Italian banks emerged as one of the top performers at the end of the year, with Banco BPM gaining 5.4% on its second trading day.
Since the UK and Swiss markets were closed during the holidays, the benchmark index was able to remain in the overbought territory, measured by the relative-strength index, reaching its 12-day high, leveling with its longest run in the century.
Meanwhile, German shares rose with the help of the lender Commerzbank AG and car manufacturer Volkswagen AG. According to reports, the manufacturing PMI in Germany reached 55.6 last December, which was the highest reading since January 2014.
Overall Purchasing Managers Index for the eurozone climbed to 54.9 in the last month, climbing from the previous rate at 53.7 last November. When a reading from the PMI reaches above 50.0, this indicates that there is an expansion in the activity of the country, whereas a reading below 50. 0 indicates a decline.
However, doubts on the eurozone’s performance for 2017 are still being expressed by investors and analysts due to its fragile economic recovery from the events that took place last year.
The continent is currently seeing anti-euro populists surfacing and has gained traction in 2016 and must face a test at the polls for the 2017 elections in France, the Netherlands, and in Germany.
“Political risks remain elevated this year. Europe will grapple with the need for resolution of the Italian banking crisis and elections in key countries France and Germany, not to mention a growing terrorist threat,” said analyst Julian Howard.
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