After the inconclusive result of the May 6 election, political parties in Greece continued to struggle unsuccessfully to form a coalition government. Since no agreement was reached, another election will be held in June. With the Greek people unwilling to take any more austerity and the EU unwilling to provide more assistance if they don’t take the harsh measures, the possibility of Greek exit from the euro is looking ever more likely.

However, with so much at stake, the possibility of another Greek bailout is not to be excluded either. This is having a negative impact on the markets notwithstanding sound earnings and fundamentals being reported by many companies.

Notwithstanding the ravaging debt crisis in Europe, GDP in Germany grew by 0.5% from the fourth quarter, when it fell 0.2%. According to a Bloomberg News survey, economists predicted an increase of a mere 0.1%. French GDP stagnated.

The better-than-expected GDP in Germany was helped by exports to emerging economies as demand in Europe declined. In the meantime, the eurozone flash GDP for the first quarter was flat. After GDP contracted 0.3% during the previous quarter, the region narrowly avoided a second recession in three years.

Boosted by gains in the car manufacturing sector and utility use, industrial production in the US climbed more than expected during April. Following a revised 0.6% decline in March, output at factories, mines and utilities rose 1.1% last month, the highest level since December 2010.

According to the forecast by a Bloomberg News survey, economists had forecast a 0.6% gain.

In the meantime, data released by the US Labour Department shows that the consumer price index was unchanged in March, in line with forecasts. This also follows three consecutive months of gains. Separately, housing starts rose 2.6% to a 717,000 annual rate in April from a revised pace of 699,000 in March.

This article was compiled by Bank of Valletta for general information purposes only.