Markets braced for further turmoil as uncertainty reigns

Elizabeth Fournier
JAPAN’S top share index lost as much as half a per cent in early trading this morning, setting the tone for what is likely to be another volatile week for global markets.

Martin Slaney, a City A.M. columnist and director of global dealing operations at GFT, said he expected the FTSE 100 to open down one per cent this morning, below the psychologically-important 5,000 barrier.

“It wouldn’t be unreasonable to say there is a whole lot more volatility on the way,” said Slaney. Last week, £73bn was wiped off the value of Britain’s blue-chip companies.

In a move that is sure to rattle markets further, German chancellor Angela Merkel last night reiterated her opposition to funding indebted countries with Eurobonds, which would be underwritten by the stronger Eurozone states.

US stocks are also expected to suffer, as markets await an important annual speech from US Federal Reserve chair Ben Bernanke on Friday. Last year, he used the address to float the idea of further monetary easing, dubbed QE2, and many traders hope he will signal QE3 this time round.