Eurozone stocks got good news on the first day of trading in 2017, which sent their shares up to a level not seen in longer than a year.
According to a report in Reuters, data showcased manufacturers’ increased activity at the fastest pace in greater than five years. Reuters reported the eurozone’s blue-chip Euro STOXX 50 index rose half a percent, hitting its highest level since December of last year. Stocks were lifted by the purchasing managers’ index (PMI) for factories in the currency bloc, which came in at 54.9, which Reuters said is above the 50 mark that separates growth from contraction.
The Euro didn’t benefit from the new figures, falling 0.4 percent to below $105. It had climbed to as high as $1.07 on Friday amid low trading. Analysts cited a resumption of an increase in the greenback for the decline in the Euro Monday (Jan. 2). The greenback is benefiting from expectations that the Federal Reserve will raise interest rates as much as three times during 2017. There’s also hope the Trump administration will boost growth in the U.S.
“In the last days of 2016, we saw the dollar retreat somewhat, and there might be some sense of a correction from Europe this morning. I don’t see any fundamental drivers for the moves,” Commerzbank currency strategist Esther Reichelt in Frankfurt told Reuters.
Elsewhere around the world, Italy’s main share index reached a level not seen since last January, with banks leading the rally buoyed by a strong manufacturing report and sentiment that seems to be improving. With stocks gaining in Europe, the yields on lower-rated government bonds in the eurozone felt some downward pressure, with Reuters reporting they hit multi-week lows. Ten-year bond yields in Italy, Spanish and Portugal were down around 8 basis points each.