Volatility fears increase after May whiplash

Equity markets suffered a whiplash effect before and after the second weekend of May, with the Eurostoxx 50 dropping 4.26% on Friday, May 7, only to bounce back by 10.35% the following Monday.

Volatility in demand

The spike in implied volatility was reflected in the Vix and VStoxx indexes. “The spread widening [between the two indexes] observed over recent weeks is likely to bolster recent concerns about a contagion to other [vulnerable economies in Europe beyond Greece],” stated a report published by Barclays Capital on May 17.

“The spread between the Vix and VStoxx is contained in a 0–8% range. The strong resistance level at 10% was broken for a significant period during the technology, media and

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