Eurozone volatility will keep unsettling investors

IT’S A DIFFICULT one to call this morning; after hitting a two-week closing high on Thursday, the FTSE promptly dumped 171 points on Friday. Both moves were attributable to the Eurozone, and that volatility will no doubt remain with us for now as the debt crisis - and the future of the euro itself no less - continues to play on investors’ nerves.

GFT is quoting the FTSE 100 index to open up 10 points from Friday’s close, at a level of 5,272. The German DAX is expected up 38 points at 6.094, and the French CAC is forecast to open up 18 points at 3,578.

There’s no getting away from the fact that Eurozone fears will continue to be centre-stage for markets. Will the riots seen in Greece on the back of severe austerity measures spread to Spain and Portugal? Will Greece ever be able to repay the debt? Are the Germans and the French going to keep their faith in the EU? Just how exposed are the EU emerging markets such as Serbia, Bulgaria and Romania? In the absence of any quick fix, the uncertainty surrounding these issues and more will continue to dominate direction. We have UK CPI inflation data out tomorrow, and a level of 3.6 per cent is forecast, well above the official inflation ceiling of 3 per cent. But with the prospect of deficit cuts ahead the longer term inflationary presures are muted. Over in the US, as the current earnings season winds down, we have Hewlett Packard, Home Depot and Wal-Mart reporting tomorrow. These are three Dow member stocks so have market-moving potential.

Martin Slaney is director of global dealing operations at GFT.