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Financial focus

Midweek Headlines:
• UK set to narrowly avoid triple-dip slump
• Slovenia says it will not need a bailout
• EU may extend bailout loans for Portugal & Ireland
• Greece asks Germany for €162bn in war reparations
• Chinese trade with US surges in Q1
• Chinese inflation eases
• S&P 500 records first back-to-back gain in over 3 weeks
• Nikkei rises to highest close in nearly 5 years
• Most European markets expected to open higher
• Yen continues to slide on BoJ stimulus measures
• WTI crude drops from one-week high as stockpiles climb
• Wheat prices fall ahead of report showing higher reserves

News:
The UK will narrowly dodge its third recession in five years, with GDP
growth in the first quarter of 2013 just edging into positive territory, the
National Institute of Economic and Social Research forecasted
yesterday. Their data shows the economy expanded 0.1% in Q1 of
this year, a turnaround after the 0.3% fall in GDP seen in the closing
months of last year. This would stop the UK from entering a third
technical recession – defined as two consecutive quarters of negative
output growth – since the financial crisis.

Slovenia yesterday insisted it would not become the latest Eurozone
country to require a bailout, despite a warning from the Organisation
for Economic Co-operation and Development that the country is not
doing to enough to tackle a “severe banking crisis”. Slovenia is
seeking funds to heal its state-owned financial sector in the wake of
last month’s botched bailout of Cyprus. The OECD recommends that
Slovenia should sell state-owned banks that are viable and allow
those that are not to fail.

Ireland and Portugal could get major extensions to their bailout loans
this week, if other EU countries accept recommendations from
international lenders. A possible seven-year extension would be
particularly timely for Portugal as it is struggling to push through
austerity measures against courts, which have struck down some key spending cuts.

A document marked top secret and leaked to the Greek press has revealed the crisis-hit state believes Germany owes it
€162bn in war reparations. The figure – equivalent to 80% of Greek GDP – includes €108bn in compensation for the
catastrophic damage visited upon the country’s infrastructure and economy under the Nazi occupation of 1941 to 1944.
Chinese trade with the US surged by 10.8% from a year earlier in Q1 of this year, but fell with Europe, providing further
evidence of the uneven recovery in the global economy.

Consumer price inflation in China eased in March, figures from the National Bureau of Statistics showed yesterday. The
consumer price index grew 2.1% over the year, under economists’ expectations of a 2.4% rise.

Markets:
Yesterday, US stocks rose, giving the S&P 500 its first back-to-back gain in more than three weeks, on optimism over
earnings and as commodities gained amid a report showing China’s inflation slowed. The Dow added 0.4% to record its
highest ever closing level at 14,673.46.

Overnight, Japan’s Nikkei average climbed to its highest closing level in nearly five years, with shares in banks and
securities firms in demand, after the central bank started its ultra-loose monetary easing earlier this week.
Today, European markets are expected to open mostly higher as Chinese trade data suggests a recovery in the world’s
second-biggest economy is gathering pace.

Currencies:
The yen fell against all of its 16 major counterparts as the Bank of Japan’s unprecedented stimulus measures aimed at
ending almost two decades of deflation spurred bets the currency will weaken further.

Energy:
WTI fell from the highest price in almost a week after US crude stockpiles increased to the largest since 1981 and
Chinese imports of the commodity dropped.

Commodities:
Wheat declined before a US Department of Agriculture report today that may show higher world inventories before the
2013 harvests, boosted by bigger stockpiles in the US, the largest shipper.

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