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Quarterly Review

Published Thursday, April 2nd, 2015

The end of the calendar quarter is always a good opportunity to look back, examine key events from the period and try to draw a conclusion as what to expect for the coming three months. Just by looking at the quarterly returns one could conclude that the global and regional economies are in a fairly good shape whilst something bearish is happening in the oil market.

Stock markets, in general, finished the first quarter of 2015 in positive territory with the MSCI Global Equity Index closing 1.83% higher. Asian markets have produced decent returns with the Nikkei 225 index gaining 10.06% and the Shanghai Composite returning 15.87% to investors. These are attractive returns but let us not forget that these gains are primarily due to Abenomics and increasingly accommodative Chinese monetary policy. The resilience displayed by equity indices has therefore not come from genuine economic strength.

In Europe the FTSE-100 index gained 3.15%, the Russian stock market rallied 11.35% in the quarter, Spain’s IBEX closed 12.08% higher and Greek stocks shed 6.14% of their value. The market is understandably concerned about Greece’s ability to service its debts and remain part of the currency union. EU-imposed sanctions on Russia due to the Ukrainian crisis are something that makes investing into this country risky and dangerous. The rest of Europe has received a boost from the ECB’s €60 billion/month bond-buying programme aimed at propping up the region’s ailing economy and fight deflation. Once again, the positive stock market performance is not based on solid economic performance.

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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.