Positive verdict expected on bank stress tests
RESULTS from the European bank stress tests came out on Friday but after the close of European markets. Fewer banks than expected failed the tests – just seven smaller ones – and we are likely to see some relief filter through to stock markets this morning.
GFT is quoting the FTSE 100 index to open up 35 points from Friday’s close, at a level of 5,347. The German DAX is also expected to start higher, up 34 points at 6,200, and the French CAC is forecast to open up 32 points at 3,639.
Whether the opening gains for stocks can be sustained will ultimately be determined by the amount of credibility attached by investors to the tests; although the euro initially weakened on Friday after the results were released amid a general skepticism over the tests’ worth, as the details then started to filter through the euro eventually rallied along with the US stock markets. Star-billing for corporate results this week goes to BP which reports tomorrow. Reports of chief executive Tom Hayward’s imminent exit are rife, but the oil giant’s own estimate of the costs of the spill and the provisions made is probably more relevant.
Martin Slaney is director of global dealing operations for GFT.