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Greek circus rolls back in town

Published Friday, August 21st, 2015

Uncertainty and caution continued to dominate action across major equities indices as lingering concerns over the health of the global economy were joined by the return to the front pages of Greece’s political crisis. On the day in which Athens received the first slice of its latest bailout and thereby assuring its solvency for the next three years, the nation’s embattled Prime Minister tendered his resignation as he went about dealing with the growing discontent from within the ruling-party. The decision by Alex Tsipras to pave the way for snap elections was seen by many as inevitable with the substantial contingent of Syriza dissenters robbing the government of a parliamentary majority following last week’s rebellion vote against the financial rescue package.

Political turmoil in the currency-bloc was coupled with yet another fall in Chinese shares which led the pan-European FTSE Eurofirst 300 down to a six-month nadir while the UK’s FTSE 100 entered into correction territory closing 10.4% down from this year’s high. Bourses across the pond didn’t fare any better with a solid reading of business activity in the US-mid Atlantic region and existing home sales climbing to an 8-year peak having a muted impact on sentiment. The Dow and S&P tracked the move lower to close down more than 2% with the latter suffering its biggest daily fall in 18 months as it entered negative territory for the year.

An additional overnight slump of more than 4% on the Shanghai Composite is likely to prompt further investor angst as markets digest a downbeat preliminary Caixin/Markit Chinese manufacturing PMI which eased to more-than-a six-year low in August to 47.1 from 47.8 in July and well below expectations of 47.7. In contrast an equivalent reading for Japan came in at 51.9 as its manufacturing activity expanded at the fastest rate in seven months.

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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.