St. James's Place News
Equity rally tempered for now
After a period of relative calm, investors have been reminded that the Greek sovereign debt crisis is still very much rumbling on. Angela Merkel declined to support the request for more time to implement austerity measures and pay back eurozone loans, but did pledge to help Greece "as much as we can".
The summer share rally slowed last week as political wrangling in Berlin and Brussels took centre stage. European markets closed down 1.6% for the week as hopes of quick European Central Bank action faded slightly; although it must be pointed out that the region’s equity markets have increased around 15% since the trough in early June, posting 11 weeks of consecutive gains over this period. This slowdown wasn’t confined to Europe; markets globally were subdued amid eurozone concern as well as signs of a slowdown in China.
Also in this week's bulletin...
- The increasing likelihood that Greece will require a third bail out should not be seen as a guarantee they will receive it; with an election looming in 2013 and the population increasingly against the single currency, German Chancellor Angela Merkel is unlikely to agree without a fight.
- The immediate fate of stock markets could be dictated by a busy September, with a crucial ruling by Germany’s constitutional court on Europe’s new bailout fund, Dutch elections and decisions expected over Greece and ECB action in the bond market.
- Despite official figures showing that the recession in the UK had not been as deep as originally feared, many economists now expect the UK economy to contract this year and for the Bank of England to respond with further stimulus.
View this week's Market Bulletin (PDF), which contains thoughts and opinions of St. James’s Place and our range of investment managers on the key issues affecting investors.
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