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Grexit one step closer

Published Tuesday, February 10th, 2015

The Greek fiasco cast an ever increasing shadow on investor sentiment yesterday after its newly-elected leaders defiantly raised the anti-austerity rhetoric. Alex Tsipras quashed hopes of a looming debt compromise after he ruled out an extension of its bailout and promised to reverse reforms imposed by its lenders. This belligerent stance was echoed by the Greek finance minister, Yanis Varoufakis, who dismissed the possibility of another financial rescue and stressed the need to end the period of austerity on his way to a meeting with eurozone finance ministers. These proposals were rebuffed by the European Commission President and raises the prospect of an end-of-month showdown when Greece’s existing bailout is due to expire.

As if fears of a Grexit weren’t enough to dampen risk appetite, further evidence of a slowdown in China’s economy added to mounting concerns of waning global growth. Soft trade data revealed its exports and imports slumped by 3.3% and 19.9% respectively in January compared with a year ago. This macro weakness was tracked by a bigger-than-expected fall in consumer price growth during the same month with annual inflation falling to 0.8% from 1.5% in December. The final ingredient in the bears’ cocktail was the escalating conflict in eastern Ukraine which looks set to endure as diplomatic efforts aimed at resolving the crisis continue to fall short.

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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.