The rally in financial markets since the start of the year has lost some steam in recent weeks. Most stock markets have fallen by around 2-3% since the start of the month and most currencies lost a little ground against both the dollar and the euro (Poland is the exception). Given our bearish view on growth and, more importantly, our expectation that the crisis in the euro-zone will re-escalate over the coming quarters, we fear that this could be the start of a new leg down for the region’s markets.
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