14th August 2014 - European Economic Update
European markets are expected to be tested today as news on the EU's economy starts to filter through.
With its two largest economies showing either none or poor growth all eyes will be heading towards the ECB to see whether it will look to make a further announcement regarding its potential asset purchase program.
Germany, Europe's largest economy shrunk by 0.2% for the 2nd quarter after expanding by just 0.7% for the first 3 months of 2014. Year on Year growth is up 1.2% however with the recent gap in their trade balance it is fair to say there will be some concerned investors over the next week or so. Many would point to issues in Ukraine and Iraq for slowing down the economy but the government has sited public holidays in May and their neighbors poor performance hindering their own. Both France and Italy have taken a turn for the worst and this has had a knock on effect to the strong Germany economy.
France, the second largest economy has for the second quarter this year seen no growth whatsoever. In a bizarre twist, the French have also said that their performance has been slowed down by increased mid-week public holidays and poor weather at the beginning of the year.
With the ECB's announcement last week that they would be prepared to implement some form of asset purchasing program should inflation continue to be a concern, now that the data is out can we expect some more details about the proposed program? Whether Mr. Draghi leaves it till next month's meeting we are unsure but one thing that is for certain, the EU needs some form of working stimulus.
With winter just round the corner and issues in Ukraine nowhere near resolution there will be plenty of Europeans worried about their gas supplies and bill this year and they will be looking to the European Union to have in place some contingency should matters take a turn for the worse.
Major Indexes as of 14th August:
Index % Change Close/
DOW Jones (+0.55%) 16,651.80
FTSE 100 (+0.37%)
CAC 40 (+0.78%)
Nikkei 225 (+0.66%)
Hang Seng (-0.40%)
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