European Countries Need to Cooperate

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) August 18, 2011 --

Today, Asian stock exchanges are trading in the negative for the first time after three straight days of growth. The Japanese Nikkei 225 Index already lost 1% since the beginning of the trading session in Asia. China’s Shanghai Composite Index lost 0.2% while the Australian S&P/ASX 200 added 0.9%. American stock exchanges closed in the negative zone, while the S&P 500 Index lost 1% in yesterday’s trading. It was announced yesterday that German Chancellor Angela Merkel and French President Nicholas Sarkozy did not manage to develop a clear plan of action to regulate the situation in Europe. It was decided not to increase the size of the aid fund for European countries or to sell Eurobonds. In the words of European leaders, it will first be necessary for Eurozone member countries to better integrate with one another and then to take such extreme measures. The two-hour meeting in Paris did not bring the long-awaited results that investors all over the world were hoping for.

At 12:30PM (Moscow Time), the UK National Statistics Agency reported that the country’s inflation level had risen even more than experts had predicted. In monthly terms, the increase in consumer prices in Great Britain was 0.0% compared with a 0.1% decrease in June 2011. Year on year, the country’s rate of inflation growth was 4.4% which turned out to be higher than the 0.1% rate the majority of analysts had predicted. The main factor behind the growth in Great Britain’s inflation was the increase in prices on clothing, shoes, domestic services, and property removal. At the last Bank of England meeting, the bank’s Governor, Mervyn King, said that inflation in the country may reach 5% by the end of 2011. RoyalMaxBrokers analysts note that GDP growth in Great Britain was 0.2% in the second quarter.

Yesterday it was reported that, despite positive predictions coming from the majority of analysts, GDP growth in Germany and the entire Eurozone stalled. The statistics released yesterday came as a big surprise for those who not long ago were complaining of stagflation in the US and UK and insisting that such a scenario could never happen in Germany, the “engine” of the European economy. Investors’ mood changed dramatically after the data showed that the German economy’s growth rate was only 0.1% for the second quarter of 2011, compared with 1.5% GDP growth for the first quarter. Most analysts polled by Bloomberg predicted a 0.5% increase in German economic growth but were proven wrong once again. In annual terms, GDP growth was 2.8% at the same time that most experts were predicting 3.2% growth. Germany’s Bureau of Statistics reported that the weak macroeconomic statistics are probably due to the fact that Germans are spending much less than they did in the previous quarter. Immediately after the data on Germany’s GDP was published, the forecast for Germany’s overall economic growth was lowered from 3.4% to 3.0%.

Yesterday, ratings agency Fitch confirmed the US’s AAA credit rating with a positive outlook before the opening of the American stock exchanges. “If the US’s debt level grows higher than the predicted level, then a downgrade will be inevitable,” a Fitch spokesman warned yesterday.

Today at 4:30PM (Moscow Time), data will be published on the US Consumer Price Index. RoyalMaxBrokers analysts are expecting this figure to increase to 0.1%, compared with -0.4% in June of this year.

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