AFTER last week’s jitters and ensuing sell-off which resulted in 200 points being shed from the FTSE, all eyes are on the UK market to see if it will hold up above 5,000 today after testing the psychologically significant level last week for the first time since October.
We foresee a mildly positive open for European stock markets this morning following a triple-digit rally from the Dow, but any attempt at a similar turn-around this morning is inevitably going to be fragile after the swings and corrections we have seen.
FTSE, DAX AND CAC ALL LIKELY UP
GFT is quoting the FTSE 100 index to open up 13 points from Friday’s close, at a level of 5,075. The German DAX is expected up 6 points at 5.835, and the French CAC is forecast to open up 18 points at 3,448.
After last week’s decision by Germany to ban naked short selling back-fired and created panic rather than preventing it – touted as a “ban on speculators” it was both inaccurate and ineffective – we can see just how sensitive the markets currently are to political decisions.
Today’s announcement from George Osborne as to how the UK government will achieve £6bn of cuts wil probably be rather less rash but could hit a few nerves, especially after the comments at the weekend from chief secretary to the Treasury David Laws that we are now entering “an age of austerity”.
AUSTERITY MAY BE BEST MEDICINE
It’s hardly the platform for a market rally, one might think, but on the other hand it may just be the dose of medicine which ultimately restores investors’ confidence.
Martin Slaney is director of global dealing operations at GFT.