It has been a mixed Monday today, with a host of good news and a drop of bad news. Greece has finally agreed terms, which means it will almost certainly move past the drama of the past few months. Markets rallied around the world at the prospect of a more stable financial future. Unfortunately, oil reached a high since the middle of last year which may unsettle global economies again.
Good news first and this times it is out of Greece. The middle of March was D-Day for Greece and the Eurozone to agree a €130bn bailout package, which would open the door for up to €1trn worth of funds being made available. But the deal rested on several key terms: Greece had to agree a ‘haircut’ with private investors; the European Union had to come to a political agreement on what form the bailout would take, then the Eurozone countries would need to agree to Austerity measures. After many meetings, political gaming and long-winded debates, Greece finally agreed a deal and are now waiting the official sign off from EU ministers. The only trouble is that now the markets will be able to assess the real value of the Euro, which may not be to their liking.
Iran continues to grab the headlines, with news that they have stepped up their nuclear enrichment programme. Bad news for oil prices – CL Oil reached above the $105 per barrel mark which has a knock on effect on prices at the pumps. Diesel in the UK is now above 140p per litre, which will no doubt create inflationary pressure. Analysts in the city say the price of oil can fall if there is no war in Iran, however, nobody believes this is now avoidable. The UK economy cannot afford further inflationary prices, with growth so slow any restriction on consumer sentiment and consumer spending may force us into a second recession.
I guess you have to take the ups with the downs. (JKM)
