Eurozone equities rise in the wake of the Greek debt crisis
Greece’s debt crisis is all over the Eurozone and the world headlines these days. With a Greek default and a subsequent Grexit[1. Greece’s exit from the European Union] looming, capital markets have become very volatile and susceptible to any new developments in the area. However, European equities—which should be the most affected—seem quite resilient. The Vanguard FTSE Europe ETF (VGK) rose 2.33% on June 22’s close and the SPDR EURO STOXX 50 ETF (FEZ) advanced 3.85%.
These rises came despite the last-minute meeting called by Eurozone ministers on June 22, which didn’t help Greece. Anheuser-Busch (BUD) climbed 2.43%, Aegon (AEG) gained 3.11%, and Novo Nordisk (NVO) gained 4.07%. Investors mustn’t have failed to notice the National Bank of Greece’s (NBG) big gain of 18.8%. Even the Global X FTSE Greece 20 ETF (GREK) was up 8.29% on June 22. Markets are fickle.
Eurozone consumer confidence steady in June
According to a June 22 release by the European Commission, consumer confidence in the European Union held steady at -5.6 in June from May. Consumer confidence readings in the Eurozone had been improving up to March 2015 on the back of declining oil prices, which had boosted consumer confidence by increased purchasing power. However, with the reversal in oil price trends since the second quarter this year, Eurozone consumer confidence also seems to have dipped.
According to the European Commission website, “In June 2015, the DG ECFIN flash estimate of the consumer confidence indicator improved in the EU (+0.7 points to -3.3) and remained stable in the euro area (at -5.6) compared to May.”
However, the European Central Bank’s (or ECB) quantitative easing (or QE) program is also doing its part to boost confidence among consumers and investors in the Eurozone’s recovery and growth. Consumer confidence helps boost consumer spending, which is key to economic growth.
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