ETFS Multi-Asset Weekly Greek Cooperation Supports Bullish Sentiment
Crude prices oscillate on conflicting signals.
European stocks rise following Greek repayment.
Australian central bank surprises markets.
China will take center stage this week as the country releases Q1 growth figures and lending data. Any signs of weakness will likely stoke speculation that Chinese authorities will conduct further stimulus measures in order to meet the recently set 7% economic growth target. In Europe and the US, inflation data will give an indication as to the continued deflationary impact of energy prices. In particular, US consumer inflation will be monitored for any signs of recovery from last month’s 0% reading, as it is considered a key component in the Federal Reserve’s decision to initiate monetary tightening.
Crude prices oscillate on conflicting signals. The price of US crude ended the week up 3.4% after a week of large moves. Oil prices rose approximately 9.6% at the start of the week boosted by news that Saudi Arabia was increasing the price of oil shipments sold to Asian consumers, underlining the growing belief that global oil demand is recovering. This was further corroborated by the release of the Energy Information Administration’s (EIA) monthly energy outlook, which predicted that global oil consumption will grow by an estimated one million barrels this year. However, after a report showing that US crude inventories experienced the largest injection in 14 years, gains were trimmed with the WTI price plunging 6.6% in a single day. Industrial metals benefitted from Chinese authorities lowering guidance rates for funding agreements. The accommodative move was seen as an attempt to buoy economic activity, resulting in lead finishing the week up 4.3%.
European stocks rise following Greek repayment. Greece repaid a €450 million bailout loan instalment to the International Monetary Fund (IMF) on Thursday causing European equity markets to rally. The FTSE MIB and DAX 30 rose 2.7% and 1.7% respectively during the week. The repayment soothed investor fears that Greece would delay matters, as tensions between finance ministers escalate over the terms of a debt arrangement. The newly elected far left Syriza party has been reluctant to accept any deal that incorporates any form of austerity, as doing so threatens to compromise the party’s credibly amongst the Greek electorate. The FTSE 100 rose 2.7% during the week as the price of Brent crude rose 2.9%, boosting oil and gas stocks that compromise 14.3% of the index.
Australian central bank surprises markets. The Reserve Bank of Australia (RBA) shocked markets this week by holding the country’s benchmark interest rate at 2.25%. Most economists had forecasted that the RBA would cut rates in order to bolster recent subpar economic growth and sluggish business capital expenditure. The unexpected move caused the Aussie Dollar to strengthen, rising 3.7% and 2.5% against the Euro and Sterling respectively. The New Zealand Dollar also appreciated this week following the strongest reading in the Australian Construction Index in five months. The data release came following a statement from the New Zealand Prime Minister John Key which stressed the importance of the Australian economy to New Zealand, making the positive impact from the data more pronounced. The NZD finished the week 2.6% up against the Euro.
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