JAMIE McIVOR

A senior MP has warned that the forthcoming inquiry into the UK's energy companies should also investigate the wholesale gas market. Tim Yeo, who is Chairman of the Energy Committee, has written to the Competition and Markets Authority, which is running the inquiry, saying the investigation would be compromised from the outset if it didn't look at wholesale gas prices. The study of the UK's big six energy firms was launched after the regulator, Ofgem, questioned the effectiveness of competition in the market. Well, with me this morning is Haig Bathgate of Turcan Connell. Good morning to you, Haig.

HAIG BATHGATE, Turcan Connell

Morning, Jamie.

JAMIE McIVOR

And let's turn from the energy markets to the stock markets. Now, just put this into perspective, a lot of volatility in the markets lately - what's causing this?

HAIG BATHGATE

Yes, well, there's a continued level of volatility in the markets at the moment as investors are trying to work out when the first interest rate increase is going to come through, whether that's going to be in the UK or, seems more likely now, in the US and, of course, we've got central bankers constantly trying to dampen expectations, although at some point they are going to have to change stance and increase interest rates.

JAMIE McIVOR

Just how great is this volatility?

HAIG BATHGATE

Well, it's having a major impact, I mean we're seeing daily stock market volatility, movements of two or three percent in some cases, so it's having a meaningful impact, it obviously impacts investor confidence and it has an impact as well in companies who are looking to float onto the stock market, and we've seen quite a lot of that of late.

JAMIE McIVOR

Any light at the tunnel, how long is it going to go on for?

HAIG BATHGATE

Well, it will go on until we see the first interest rate increase, probably in the US is our assessment, and unfortunately at that point, as is consistent with historic periods of interest rate normalisation, we would expect probably an even greater pick-up in volatility at that point as investors try to absorb the information.

JAMIE McIVOR

That's all looking a little bit into the future, let's just take a look at the coming week ahead and half year results are due from the insurance company Aviva. I suppose very much the challenge for the Chief Executive, Mark Wilson, will be to show the turnaround there is continuing - how do you think it's looking?

HAIG BATHGATE

Well, yes, and I think against quite a difficult backdrop for the insurance industry, obviously we've had the continued strength of sterling, which has hurting insurance companies generally, the Chancellor's overhaul of the annuities industry is having a big impact on Aviva as well - so, again, it has been a difficult backdrop, we're expecting to get an update from them and see how they are getting on with the restructuring, we would expect them to make some good progress with this. There have been a number of non-core assets sold so it will be interesting to see what happens.

JAMIE McIVOR

Well, these are all the things that Mark Wilson and the team can do something about, but how much does the performance of an insurance company almost depend on fate...you know, things like maybe cost savings partly offset by claims after winter storms, either here or in the other side of the Atlantic?

HAIG BATHGATE

Yes, that's right, and obviously a number of these cost saving measures have been offset by harsh winter conditions so, yes, a lot of it is outwith their control and certainly changes in the annuity market won't have helped either.

JAMIE McIVOR

We're hearing from insurer later in the week, RSA. Stephen Hester, formerly of Royal Bank of Scotland, is the boss there now and he's going to updating the market on the rescue plans for the company. They went through an awful time with profit warnings, is he really managing to turn it around?

HAIG BATHGATE

Well, yes, I mean Steven Hester obviously is no stranger to turnaround situations of a high profile. I think he's going to announce good progress on this today - again, they've been going through a period where they've been restructuring non-core businesses, we're going to see the impact of some of those sales coming through. We're still expecting quite a major slump in profits and, as you alluded to, bad weather claims and the Chilean earthquake are going to have weighed on their results as well, but I think, again, against expectations he's probably going to show that things are turning round maybe slightly more quickly that he had set out in his three year plan.

JAMIE McIVOR

Haig, thanks very much indeed for coming in this morning. That's Haig Bathgate there of Turcan Connell.