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Eurozone banking concerns subside

Published Tuesday, July 15th, 2014

The start of a new week saw risk appetite make a strong comeback to global equity markets as concerns about Eurozone banks faded and investors took heart from a fresh bout of M&A activity. Calm returned to euro-area debt markets as periphery yields headed lower from recent highs with Portugal’s benchmark borrowing costs dipping as much as 14 basis points. The improved mood came in spite of disappointing economic data from the region where industrial production stumbled in May, shrinking 1.1% compared with April. Moreover, markets shrugged off the latest warnings from the IMF in which it highlighted the growth and deflation risks still faced by the currency bloc.

Yesterday’s flurry of bid and merger activity in the healthcare sector and better-than-expected corporate earnings sent Wall St higher. The Dow and S&P 500 added 0.7% and 0.5% respectively as the former hit an intra-day record on its way back to a close over 17,000. The surge in risk assets came at the expense of perceived havens such as gold which suffered its biggest one-day fall this year, losing over 2%. Focus will now turn to monetary policy as investors count on the testimonies of Mark Carney and Janet Yellen to sustain the upward momentum. This comes as the latest easing efforts from Beijing continue to support the economy with loans and money supply for June coming in at a stronger-than-expected level.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.