Europe
continued to be the main focus around global markets today as the ECB gave a
March 25th deadline for Cyprus to come up with a plan to raise a
further €5.8bn.
The
mood was further dampened by poor manufacturing data out of Germany and France,
the bears gained momentum as similarities to last year show.
Whilst
last year did not have the momentum of money moving into equity markets, and an improvement
in the U.S, we did see equity markets rise at the start of the year over
optimism that the worse was over for the Eurozone. Then... equity markets fell off a cliff as
worries Greece would vote in an anti-austerity government causing the
possible break-up of the Eurozone. This
did not happen, however with its neighbour Cyprus banging on the door, we could
see a similar situation.
Many
have a fairly heavy weighting to equities within their portfolios, and this would
have turned out nicely over the past 6 months. But questions may be rolling through the
minds of many investors as doubts whether the Eurozone can keep funding
bailouts spread. With Germany’s elections
coming up in December, Merkel is somewhat on the back foot about using tax payer’s
money to bailout countries which have been reckless with their economic
policy. Anti-austerity
political parties in many countries are gathering momentum as seen in the most
recent election in Italy and it is a concern this may happen in Germany,
resulting in a Eurozone without a leading economy.
This
year will certainly be a bumpy ride for the Eurozone, and with Cyprus issues to
be resolved, uncertainty over an Italian government and economic issues in France
(read more on this soon) let’s hope the end result is positive.
I
still maintain a positive outlook for equity markets over 2013, and as long as these issues are resolved quickly, it will draw focus away from the negatives and
look forward to the possibilities the future holds!
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