Fourth quarter set for an inauspicious beginning

EUROPEAN stocks have just suffered their worst quarter in nine years, but anyone thinking that this might present us with an opportunity of restored calm to repair portfolios, or that some bargain-hunters would be tempted in to the market will be disappointed; the fourth quarter is expected to open with another day of dramatic falls.

GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed.

FTSE SET TO OPEN LOWER
The FTSE 100 index is called to open down 2 per cent – around 100 points at 5,031. Germany’s DAX 30 index is expected to open down 118 points at 5,384, and the French CAC 40 is forecast to open lower by 60 points at 2,921.

Eurozone finance ministers meet in Luxembourg today to analyse the measures proposed by Greece to get its econmic adjustment program back on course, but don’t expect any decision just yet on whether the next loan tranche will be granted.

ECB INTEREST RATE DECISION DUE
The key euro event this week will be the ECB interest rate decision on Thursday, with some analysts predicting we could see a cut in rates of as much as 50 basis points or 1 per cent.

However last week’s surprise jump in Eurozone consumer inflation to 3 per cent , its highest level in 3 years, will surely have quashed the chances for any such move this month at least.

BANK OF ENGLAND MEETING
Just as interesting for traders is the Bank of England’s meeting this week, and following the last meeting several commentators are forecasting a second round of quantitative easing – QE2 – could be announced today, in fact in a Reuters poll last week 40 per cent of those questioned believe so, although the majority are suggesting it will come next month.

QE2 FORECAST OF £50-£100BN
Nevertheless, it’s a question of when not if, and how much: the current forecast range is for around £50bn to £100bn to be announced.

Martin Slaney is director of global dealing operations at GFT.