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Oil a risk to financial stability!

Published Friday, May 1st, 2015

Global stocks indices ended the month on a sour note yesterday as disappointing corporate earnings from both sides of the Atlantic added to already muted levels of risk appetite following recent news of a marked slowdown in 1Q US GDP growth. The latest batch of US economic reports were however more upbeat but nevertheless failed to bolster demand for risk assets. They included figures showing that consumer spending rose by 0.4% in March and US jobless claims declined to their lowest since 2000, the latter of which bolstered hopes of a strong rebound in hiring following March’s weak non-farm report. An index of US labour costs also pointed to improving labour market conditions with private sector wage growth picking up at the start of this year which in turn should provide a lift to subdued levels of inflation.

The robust macro data out of the US helped the dollar index regain some composure after its recent sell-off but couldn’t prevent it from ending the session in the red as the euro pushed past $1.12 to a nine-week high. The improving fortunes of the single-currency once again weighed on the bloc’s equity and sovereign debt markets while investors digested yet another release of mixed datasets. Sentiment was initially given a boost by figures revealing that the hitherto fall in euro-area consumer prices came to an end in April after inflation rose to zero and breaks a run of four straight months of deflation.

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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.