Volatility plummets……

…..as investors go into Olympics mode

Markets have been bombarded by conflicting data from all parts of the globe and it comes as little surprise that many investors are so uncertain of what the future holds that they couldn’t have asked for better timing to see the greatest sporting event on earth finally arrive to London. Recent trading ranges have been so diabolically narrow and volumes so thin that volatility has dropped through the floor and things are unlikely to pick up again until after the summer months and we’re into the Autumn.

The contrasting data has left investors confused following an EU summit that at least seems to have tempered nerves to some degree. The ratification process needs to be completed and further integration is inevitable in order for the measures to succeed but whether the politicians and their voters will allow it is another matter. The longer things go on however, the more the time bomb ticks and expectations are still that a “Grexit” is on the cards at some point in the near future.

At the same time doubts remain over the sustainability of the Chinese economy. This week we’ve seen lower inflation data and terrible imports numbers in a prelude to GDP figures due in a few days time. The question over soft or hard landing for the world’s second largest economy is still very much in debate and anything too much below the 8% mark could easily send markets back into a bit of a tail spin.

But whilst the issues in the eurozone continue to rumble on and China’s economy looks a little shaky there have been a couple of anomalies that have kept the bulls interested. UK industrial and manufacturing data for May was much higher than expected, almost un-recessionary it was so good and at the same time Italy released much better data. Unfortunately though this is likely to be nothing more than a flash in the pan as the May bank holiday was in June, plus it was an extended one for the Jubilee, so we can expect June’s number to bring us back down to earth with a bang.

For now though it’s all eyes on the Olympics – take your pick out of the hundreds of events to follow – I am a table tennis man myself and judging by the way the markets have been moving recently it is likely to be a great deal more fun to watch than the FTSE!

About Simon Brown
Simon Brown has over 20 years experience trading Derivatives on everything from Gold, FTSE to Dollar/Pound. Simon has lectured in Trading Psychology, Strategy and Technical Analysis, in addition to regular appearances on CNBC television. He is now Managing Director of ProSpreads.

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