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Commodities take a beating

Published Monday, July 27th, 2015

Just as Greece’s debt woes finally made their way off the front pages headline grabbers latched on to poorly-received US corporate earnings which sent global equity markets into a tailspin. The week had got off on a positive note as a sense of normality made its long-awaited return to Greece where banks opened their doors for the first time after a three-week shutdown. Moreover, capital controls were relaxed and the receipt of a bridging loan from the EU meant Athens was able to avoid defaulting on an ECB loan repayment and clear its arears with the IMF. The expected start of bailout negotiations later today and the mooted reopening of Athens’ major stock index tomorrow also helped to put Greek jitters on the backburner.

Nevertheless, the improving situation in Greece couldn’t prevent a mid-week selloff on Wall Street which reverberated across stock bourses elsewhere as investors absorbed a batch of disappointing US corporate results. The rout began in the tech sector with underwhelming earnings from the likes of Apple and IBM which rattled confidence and put risk appetite firmly on the back foot. Stronger quarterly results from the likes of Amazon and Visa in the latter part of the week as well as solid US economic reports revealing existing homes sales nearing an eight-year peak and jobless claims falling to a record low did little to stem the rout. Mixed signals on US growth prospects from a surprising fall to a seven-month low in new home sales also undermined sentiment. The result was that the Nasdaq and Dow suffered their worst week in four months, losing over 2%, as did the FTSE Eurofirst 300. The downbeat performance of US stock markets was mirrored by the dollar index which lost 0.6% over the course of the week.

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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.