During the past week the global equity markets have enjoyed a small period of calm following large falls in the previous week as an apparent fallout to the potential “Grexit” situation. Whereby the markets have become more and more used to the potential of a Greek exit from the European single currency, the Euro. This has now been more and more priced into the markets with them far down on a few months back.
On Tuesday markets rallied strongly when the Organisation for Economic Development (OECD) backed proposals from the United Kingdom and France as well as the majority of the 17 other member states of the European Sincgle Currency for the introduction of a Eurobond. But then markets plunged again ahead of the European Union summit on Wednesday as Germany’s Chancellor, Angela Merkel, made it clear that she and Germany were whole heart-idly against the move. The Germans believe that 1. introducing Euro Bonds would remove the motivation of the struggling countries’ to reform and improve their financial position. Furthermore by combining the debt of the strugglers and the strong members would mean that the weaker countries would lower their debt charges whilst the strongest would see their borrowing charges rise.
The Organisation for Economic Development has predicted that Britain would grow 0.5% in 2013 and increase its 2013 prediction to 1.9%. The better economic news was that inflation, measured on the consumer prices index, dropped to 3% in April – lowest rate since February 2010. This follows the UK going into a double dip recession over the last 2 months.
The Court of the Bank of England caved into pressure by announcing three separate reviews of the Bank’s role during the financial crisis. None however will cover the key issue of the run on Northern Rock.
In China, their largest ecommerce provider, Alibaba, bought back a 20% stake in its bucinsess which was owned by Yahoo! for $7.1bn.
Ryanair unveiled record full year profits – up 25% to €502.6m – but warned the strong run was unlikely to last. Marks a nd Spencer posted a 1.2% fall in full-year underlying profit, its first decline in 3 years. Tesco Chief Executive Officer, Philip Clarke, has opted not to take a £372,000 bonus following the retailer’s poor UK performance.
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