Market Volatility continues in 2011

<p>Market volatility looks set to continue in 2011 with the Volatility Index, the market’s main gauge of fear or pessimism in the market, spiking higher […]</p>

Market volatility looks set to continue in 2011 with the Volatility Index, the market’s main gauge of fear or pessimism in the market, spiking higher by as much as 25% on a single day last week. City Index Market Strategist Joshua Raymond examines what this means for the UK markets.

In January alone we have already seen the FTSE 100 hit new 32-month highs before falling 4.5%. In the last few trading sessions the FTSE 100 has already made a strong recovery from these falls, rallying almost 4% to trade back above the psychologically important 6,000 level.

The market has been dominated by four key themes already this year; European sovereign debt dragging down banking sentiment, economic growth proving weaker than predicted, spiralling inflation both at home in the UK and in China threatening interest rate hikes and instability in the Middle East spiking oil prices.

There remains lots of trading opportunities to keep an eye out for.

Volatility Index Spikes on 28th January 2011 

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FTSE 100 Index in January
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