European equities to post worst week this year

Shares in Europe continued to decline on Friday June 5th, mirroring a selloff in government bonds. Stock markets in the single currency region added to losses over the course of the week and looked set to record their worst weekly performance of 2015. 

It seems that volatility still reigns, which European Central Bank president Mario Draghi warned of on Wednesday. Optimism over the health of the European economic recovery appears to be supported by recent data, which is fueling the flight from bonds. However, the ongoing Greek debt crisis adds downward pressure on stocks. 

Germany’s DAX was around 1.2 per cent lower by midday, the French CAC 40 lost over 1.5 per cent and the Euro Stoxx 50 index was more than 1.3 per cent in the red. Meanwhile, the UK’s leading share index, the FTSE-100, was also dragged over 0.8 per cent south.

Friday saw a new development in the ongoing Greek debt saga, when the heavily indebted nation decided to delay its repayment to the International Monetary Fund (IMF), which was cited as the fund’s idea.

The Greek economy minister, George Stathakis, told the Today Programme that: “There was an offer already on the table from the IMF, so I think the government chose to accept this offer and repay at the end of the month.”

Later in the day, a top spokesman for the European Commission defended the decision. Margaritis Schinas told reporters that nobody should make “value judgements” about the move, and continued to point out that many countries have fallen into arrears with the IMF before.

Meanwhile, investors await the coming US non-farm payrolls report, where consensus forecasts suggest that US job growth improved a little last month, which would raise expectations of the Federal Reserve raising interest rates sometime this year.

An improvement in the US jobs market could send the greenback higher, after recording a week of losses, but any surprise to the downside will see the US dollar plummet.