Nervy markets ahead of bank stress test results
EXPECT a lot of talk and even more nerves ahead of the European bank stress test results this week. For the market open this morning, that means erring to the downside.
GFT is quoting the FTSE 100 index to open down 28 points from Friday’s close, at a level of 5,130. The German DAX is also expected to start lower, down 20 points at 6,020, and the French CAC is forecast to open down 15 points at 3,485.
STRESS TEST RESULTS DUE
The markets will have to wait until Friday for the stress test release, when 91 banks from 20 countries representing 65 per cent of the region’s banking sector will reveal just how prepared they are for another economic downturn in the next two years or even sovereign defaults. Not much is known about the criteria and methodology being used in the tests. But market hopes overall are that most banks will pass the tests, with the remainder subject to relatively modest demands to replenish their capital. Nevertheless it’s difficult to see investors committing much money to stocks before the results are known, and just as hard to foresee a sustained post-results relief rally; whilst the publication is unlikely to throw up any obvious concerns, at the same time it is unlikely to be that magic bullet to finally draw a line under investor concerns about Europe.
Martin Slaney is director of global dealing operations for GFT.