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Sampson Financial 26th January 2015 - Markets React to Greek Parliamentary Vote
A historic victory for the far left Syriza Party this weekend has seen markets in Asia decline and an 11 year low Euro.
The leader of the Syriza party in Greece, Alexis Tspiras secured control late in Sunday after the final votes were counted. He led his campaign on promises of a u-turn on the current austerity measure being forced on Greece and his intention to renegotiate the terms of the bailout exit to ensure no EU exit is necessary.
The implication of this government change will take some time to fully take effect. What is expected is an extension on Greece's bailout exit, somewhere in the region of 6 month, which will allow the new government time to establish some alternative strategies to move the country forward.
The news comes just a week after the ECB announced a massive €1.1tn QE scheme which will see it purchase government bonds over the course of the next 18mth, starting in March, to the value of roughly €60bn a month.
The Eurozone is in a critical state whereby QE is simply not enough to bolster the stagnant economy. High unemployment and weak growth seen across the entire region is a key area that needs to be addressed along with fiscal policies. It is fair to say however that unemployment and growth cannot be addressed until banks start lending to businesses in more earnest.
The Euro started the week at an 11 year low, falling to $1.1098 against the dollar. The currency has lost almost 10% since the beginning of the year whilst the Dollar has risen 5%.
European markets are expected to open lower today, with the US following suit.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Sampson Financial Management. All market data within this release is for your general information and enjoys indicative status only. Sampson Financial Management does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.
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