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Published Wednesday, January 14th, 2015

US stocks once again took the brunt of plunging commodity prices with volatile energy shares in particular contributing to an overall weakness which saw Wall St close lower for the third straight day. Market sentiment had begun the session on a positive note after a gauge of small US business morale surged to more-than-an eight year high in December. However, early gains were pared as risk aversion returned to the fore following the release of the World Bank’s latest bi-annual report in which it downgraded its estimate for global growth this year to 3% from 3.4% previously.

Meanwhile, the spectre of deflation continued to grip the eurozone after the slump in Greek consumer prices was seen accelerating to 2.5% in December from November’s 1.2% drop. However, the increasing risks posed by falling prices across the currency-bloc acted as a boon for the region’s equity indices as hopes were bolstered that the ECB will be forced to take action to prevent a downward spiral in prices. Deflationary pressures were also prevalent in the UK as figures revealed its inflation rate fell sharply from 1 to 0.5% in December from the previous month to an almost 15 year low. Meek levels of inflation ensured that highly-rated sovereign bond yields remained firmly pinned close to record lows whilst waning global economic growth prospects helped gold advance to a three-month high.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.