The past few weeks have been dominated on international markets by events in Greece and China and by the moves - or intended moves - of various central banks. In China, stock markets recovered slightly this week after massive losses in a short period at the start of the month.
Paul Sommerville, of Sommerville Advisory Markets, says the situation in China was far from resolved. "The Chinese market has been extraordinary. We've seen heavy selling on the back of big increases in the last year. The markets lost 30% in three weeks. The government tried to calm the selling pressure by banning selling in many cases. 70% of stocks were banned from trading at one stage. Markets are a little calmer but the volatility has not gone away," he explains.
Paul Sommerville says the problems were mainly stock market related but he said the financial markets had difficulties believing figures coming out of China. "GDP figures recently said the economy was growing at around 7%. Analysts believe that's incorrect, that the market is growing at around 4 to 4.5%. This has more to do with overvaluation of stocks. There'll be more selling pressure in the months ahead," he said.
On Greece, Mr Sommerville says market moves in response to the situation there had much to do with positioning in advance of a deal. "Most commentators said Grexit was a possibility but markets thought a deal would be done. That was challenged a little bit by the panic at the start of last week. Even going into last weekend there was a lot of buying and the market was strong," he states.
"But the situation with the euro was a little more complicated. A lot of people positioned themselves in the euro for a deal. The euro went up for a while on Monday but then we saw selling pressure as people sold out of their positions," he explains. The currency moves are also being dictated by the intended moves of various central banks. The US Federal Reserve is talking about increasing rates by the end of the year and the Bank of England may follow suit. "It's great for Ireland. We've broken below the 70 pence barrier and the $1.10 mark which is great for tourism and great for exports," Mr Sommerville concludes.
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