Just as the economic backdrop seemed to be improving, the European financial crisis is once again rearing its ugly head. The growing likelihood of a Greek exit from the Euro zone and mounting political uncertainty across Europe weighed on Global financial markets. There is increasing risks that the EU/IMF bailout program will be terminated, potentially precipitating in Greek exit from the euro zone. Results of the French and Greek elections last week suggest disbelief that austerity is the solution to Europe’s fiscal woes.
Interestingly enough, the economic news are not too bad. Last week trade report served up a reminder that Canada’s exposure to Europe is largely indirect. Net trade is likely to contribute positively to real GDP growth. Canada’s trade prospects hinge more on U.S. developments. Most importantly, the Canadian labour market showed vigour through April, with an impressive 58,000 new jobs created.
Until Greece goes to vote on June 17, uncertainty will remain and good economic news may not show on market results. Be patient and avoid reacting is key.
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