The Global markets have has a broadly positive start to 2012, but they seem to have run into something of a speed-bump. The MSCI Developed Market Equity Index jumped by an impressive nine percentage points – but it seems as though the markets are now taking something of a step back while they wait to see how certain critical issues are developing.
One of the most important issues right now is Greece. Though the most recent bailout was able to go ahead, there are still some questions remaining. The short term solvency and liquidity menace has been dealt with. What remains is an economy that is in free-fall (not being helped by the forced austerity measures).
One of the big issues around Greece is how the rest of the Euro member countries are likely to approach the situation going forward. The key piece in this jigsaw is believed to be France, with the upcoming Presidential elections being talked up as a decisive factor.
There has been good news from Germany, and that has been one of the things raising optimism in the markets. Although Gross Domestic Product fell slightly last year, the fundamentals of a strong economy are in place, and the outlook for business is being predicted to remain favourable.
The UK has been showing a few optimistic signs of recovery as well. Progress is slow, but consumer spending growth during January has been one ray of light.
Oil is proving problematic. The ‘go-grease’ is presenting something of a hazard to investors. Brent oil has been nearing the prices it hit at its peak before the war in Libya. The price then was $127 a barrel. It is thought that if the price reaches $150 then that is a level which will cause severe economic consequences.
Trying times are ahead. No doubt portfolio management specialists will be keeping their eyes on the news.