Deflation eases
Eurozone hope
It is still early days but signs of recovery in the eurozone appear to be getting stronger. There was confirmation this week that deflation eased during March, potentially due to the launching of the ECB's quantitative easing programme. Prices contracted by 0.1 per cent during the month, driven by a slump in energy pricing – strip this out and inflation would have been 0.6 per cent. Meanwhile, the slow-but-steady improvement in employment figures across the European Union continued, unemployment fell from 10.5 per cent to 9.8 per cent over the year to March, although levels in the eurozone economic bloc were higher at 11.3 per cent, down marginally from 11.4 per cent in March.
Click to buy
Fashion merger
The opening quarter of 2015 has seen an upsurge in corporate activity as companies use exchange rate movements and rising investor confidence to snap up rivals and build market share. And now it is the turn of the online fashion world, where Italian outfit Yoox has agreed a deal to merge with London-based Net-a-Porter to create an online presence with a combined €1.3bn in sales of luxury fashion. The all-share merger will likely value the combined business at around €1.6bn after shares in Yoox leapt following news of the deal. Luxury brand owner Richemont, which owns a majority of Net a Porter, will own 50 per cent of the combined group after participating in a €200m fundraising to be held after the merger is completed.
Stressed out
New test
The Bank of England's latest stress tests for its banking system will establish how the UK's banks react to a major external economic shock, with the potential for a slump in the Chinese economy to be modelled. Among the tests are a scenario whereby Chinese property prices slump by a third and economic growth slows dramatically to just 1.7 per cent. Other metrics include a 2.3 per cent contraction in the UK economy, emerging markets currencies falling by a quarter against the dollar and oil falling to $38 a barrel.
Brazil blow
Outlook cut
Brazil's status as a high octane emerging market looks increasingly outdated. After a tough couple of years the outlook for South America's biggest economy shows little sign of a significant upturn. A survey of 100 Brazilian economists last week estimated that the Brazilian economy will shrink by 1 per cent over 2015, shifting expectations to the downside for the 13th consecutive week. Their expectations for 2016 have also reduced with the consensus for economic expansion of 1.05 per cent, down from 1.2 per cent previously.
Oil rush
US boom
It's no wonder that the major oil producing nations of Opec have become a little concerned about the impact of US oil production on the global market. Last year saw oil production in the US increase by 1.2m barrels a day to 8.7m barrels a day as production boomed from areas such as North Dakota, where hydraulic fracking has freed up unconventional sources of oil for exploitation. The surge in production represented the biggest annual increase in production since the Energy Information Administration started keeping records in 1900. Despite drastic cuts in recent months in the face of the falling oil price, production is expected to edge up again this year.
Price war
Mortgages up
With the likelihood of interest rate rises in the UK this year receding, increasingly competitive mortgage rates have prompted an uptick in remortgaging as well as an improvement in mortgage approvals, which bodes well for a pick-up in the housing market in the coming months. February saw 61,760 mortgages approved in the UK, up on the previous six months' average of 60,750 with an uptick in the number of mortgagees switching to new lenders and the value of remortgages rising from £5.2bn to £5.7bn as competitive rates, with two-year fixes averaging under 2 per cent, prompted more borrowers to seek new terms.
