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Hopes grow for US 2Q rebound

Published Wednesday, May 6th, 2015

The London stock market returned from the long weekend yesterday to find that the status quo had been maintained in the eurozone with Greece’s debt crisis again keeping a lid on risk appetite. Greek bank shares led European stocks lower following reports that the IMF was close to pulling the liquidity plug after data pointed to Athens’ budget surplus turning into a deficit this year. Although officials from Greece vowed to repay the almost €1 billion owed this month to the international lender, with a €200 million loan tranche repayment having been made this morning, the ongoing disagreements with its creditors has all but crushed hopes of a deal at the next Eurogroup meeting scheduled for May 11.

Downside pressure on Greek assets also came from the latest revisions to growth forecasts from the European Commission. The bloc as a whole is now seen expanding by 1.5% this year, up from a previous estimate of 1.3%. The improving outlook was however not mirrored in Greece where the EC took an axe to its 2015 growth prediction with a three-month old forecast of +2.5% being slashed to a mere +0.5%. This sent the embattled country’s borrowing costs lurching higher as did the first signs of capital controls following the introduction of a surcharge on cash withdrawals.

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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.