The strong rebound in the global equity markets yesterday proved to be short-lived as global equity markets reversed and gave back recent gains today. Investors remain cautious due to growing concerns regarding Greece’s debt crisis, while speculation of a possible earlier than expected US interest rates rise weighs on market sentiment.
European equity markets retreated sharply today with the CAC, DAX and IBEX indices declining between 1% and 1.5%. In the UK, the London equity benchmark index limited losses and dropped slightly by 0.25% as robust GDP data spread optimistic signs regarding the country’s economic prospects. The UK economy grew by 2.4% y/y in Q1 2015, slightly missing analysts’ expectations of a 2.5% y/y growth.
However, uncertain economic conditions in Greece continue to dominate the global markets. The Greek government has so far failed to reach an agreement with its creditors, following five months of ongoing negotiations. Greece is due to make a payment of EUR300 mln to the IMF by 5th June 2015, though it is likely that it could miss the target, following recent rumours. The Athens Stock exchange posted renewed losses in today’s trading session.
On the macroeconomic front, US pending home sales surged 3.4% in April compared to 1.1% in March, beating analysts’ expectations of 0.9%. However, weekly jobless claims rose to 282K last week from 275K, missing estimates of 270K. The USD index fluctuated strongly in today’s session and hovered around 97.3 against a basket of currencies, at the time of writing.