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    EUROSTOXX50 : Volatility in the financial markets continues on 02.02.2016

    American stock indices, which had grown due to the decision of the bank of Japan to reduce interest rates, have been declining since the opening session today.

    European indices, which also have been declining at the opening European session, are gaining negative momentum. Despite positive data on unemployment rate in Germany (6.2% in January against the forecast and the value of December of 6.3%), European indices continue to decline. At 11:00 (GMT 2) European stock index EUROSTOXX50 has lost about 2% by the end of yesterday’s trading day and is now traded at the level of 2970.0.

    European data released at 12:00 (GMT 2) showed that unemployment rate in Eurozone was 10.4% (the forecast of 10.5% in December against 10.5% in November),producer price index in December was worse than expected (-0.8% against the forecast of 0.6% in December and -0.3% per annum versus the forecast of -2.8%).

    Negative data confirms slowdown of the inflation rate in Eurozone and indicates rather high rate of unemployment.

    The decline in oil prices, which triggers the drop in the global commodity prices of course have an impact on the manufacturing prices assesment, as producers are forced to cut their prices. On the one hand, it is a favourable factor, as production costs and prices of raw materials are going down; however, it also leads to the reduction of income and wages, which affect purchasing power and eventually causes reduction of consumer’s income and retail sales. Therefore, inflation and expansion of production are slowing down.

    Stanley Fischer, Vice-Chairman of the US Fed said yesterday that there is no clarity about the prospects of the financial conditions in the USA, due to slowdown of the global economy. It is not clear, in which way recent volatility in the financial markets will affect the US economy.

    Slowdown of Chinese economy, the second largest in the world, negatively affects the world economy as a whole, as well as the large regional economies, including European one. China is not only the largest purchaser of the raw materials and manufacturer; it is also one of the largest consumers of European goods.

    The reduction of European imports to China and decline of the purchasing power of China have a strong negative impact on European manufacturers and exporters of the goods and on the European economy as a whole.

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