Market & Supply Watch - April 2015

The EBV Analysis of the Market Situation

Since our last newsletter back in October 2014, we have seen that the oil price reached a level, which was not foreseen by anybody. Currently, a barrel is priced about $50. This, on the one hand, is a stimulator for the big economies (US, Germany and China). On the other hand, the oil producing countries will suffer a lot and this will, in turn, decrease their capabilities to import industrial equipment, to invest in infrastructure and so on. On top of all that, the Euro zone should profit from a weak Euro being more competitive especially on the US market, which, by the way, is coming back very strong with a GDP growth rate of above 4% as well as an unemployment rate going down to 5.5%. With commodity prices (oil, metals) being lower and an economy in the Euro zone struggling in most of the countries (with the exception of Germany and the UK), the European central bank was forced to lower interest rates again. There is a likelihood that Europe is running into deflation, which definitely would be the worst case scenario, because this could prevent consumer spending for the time being and have a negative impact on the total industry production. Then again, the purchasing manager indices for most of the European countries are above 50, which is usually an indicator of a growing market. The forecast for the Chinese market is a 6.5% GDP growth for 2015 and they are facing huge debt levels and a property market that is close to overheating.

Source: Commerzbank AG - Economic Research

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