Independent Commission on Banking report will hit FTSE

AT 7am this morning the Independent Commission on Banking report on reform will be published.

It’s widely expected that the main thrust of the report will be to recommend that retail banking is separated – ringfenced – from the investment banking side.

That’s a potentially monumental impact on the likes of RBS, Lloyds and Barclays. Key will be the response that emerges from the government in terms of timetable for pressing ahead with the reforms, and clarity as to the implications will also be key.

Although UK bank stocks have already taken a pounding recently in anticipation of this, as reality dawns this morning the reaction is unlikely to be positive.

GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed. The FTSE 100 index is called to open down 30 points at 5,184. The German DAX is expected to open down 46 points at 5,143 and the French CAC 40 is forecast to open down 20 points at 2,954.

September is off to a shaky start for stock market investors, and further negative psychological pressure will be felt this morning by Friday’s Dow Jones Index closing below 11,000.

Europe could well continue to dominate attention this week, with Italy’s austerity plan due to go to a final vote in parliament there later in the week, following approval by the Senate last week.

Italian prime minister Berlusconi is under additional scrutiny following the release of the contents of a conversation in which he is apparently advising someone who is facing criminal proceedings to stay outside of the country.

Also watch out for more key US data this week, by way of retail sales on Wednesday and inflation numbers Wednesday and Thursday.

Martin Slaney is director of Global Dealing Operations at GFT