Unknown variables to feed volatility

LAST week's column featured heightened volatility as its main theme, which investors would agree has marked much of the action in financial markets so far this year.

Friday's bounce on Wall Street, thanks mainly to a rise in oil prices, should enable the Straits Times Index to regain some of the 38 points it lost last week. However, there are too many unknowns which indicate that volatility should stay high in the weeks ahead.

The main reason markets are gyrating the way they are is that risk has returned to the table, now that the US Federal Reserve's QE money printing has ended. Markets are now confronted with new and unexpected unknowns such as crashing oil prices and a surging Swiss franc, and without the safety net that QE provided, are finding it difficult to cope.