London pre-open: FTSE to fall further after US manufacturing data

4th Feb 2014 07:22

- FTSE to fall 45 points- Spanish unemployment and UK construction in focus- BG Group posts rise in Q4 revenue- BT Group reports weaker Q4 and overall poor FY profitCity sources predict the FTSE 100 will open 45 points below yesterday's close of 6,465.66, extending yesterday's losses as stocks track the sharp declines seen in both Asia and the US overnight following worse-than-expected manufacturing data from the latter. The Institute for Supply Management's (ISM) index measuring activity within the manufacturing sector fell to an eight-month low of 51.3 in January from 56.5 in December, led by a sharp pull back in a gauge for new orders. However, analysts at Capital Economics said that the unexpected plunge "appears to have more to do with the unseasonably severe winter weather, than a major slowdown in both domestic and overseas activities".Alpari UK Market Analyst Craig Erlam agreed, adding that the response was "a little over the top, which just highlights the risk averse approach from investors right now". Notably, he also commented that recent poor data, along with other concerns such as emerging markets, were "all simply being used as an excuse for investors to allow for the significant correction that many investors have been calling for, for a number of months now". Turning to today, there is little in the way of economic data on the agenda, although attention will be given to the Spanish unemployment change reading for January, which is predicted to show a drop of 21,300. The unemployment rate is currently a whopping 26.03%. Overnight the Reserve Bank of Australia opted to keep its main policy rate unchanged at 2.5%, as expected. Nevertheless, Governor Glenn Stevens issued a relatively sanguine policy communique which sent the Australian dollar higher by over a percentage point.Also on the cards is January UK Construction PMI, due to register a modest decline to 61.5 - still significantly above the level of 50 which separates expansion and contraction. In this morning's company news, BG Group announced an increase in fourth quarter revenue and other operating income by 16% as it partly offset declines in Egypt and lower activity in the US by new developments coming onstream. The FTSE 100 gas giant said final quarter production was buoyed by the completion of its North Sea maintenance shutdowns, as well as new projects coming on stream such as the Jasmine field in the North Sea.Oil major BP has reported a weaker bottom line in the fourth quarter, leading to a steep drop in underlying profits for 2013. The company also warned that underlying production in 2014 would be lower than last year due to divestments and a reduction of around 140,000 barrels of oil per day due to the expiry last month of the Abu Dhabi onshore concession.Chipmaker ARM Holdings reported a 32% rise in pre-tax annual profits of £364m on the back of higher revenues, driven by technology licensing. It came despite a drop in profits in the fourth quarter due to a £59.5m impairment charge related to its decision to no longer pursue a licensing programme through its Bridge Crossing Consortium. SIG, a European specialist building products distributor, has sold its German roofing business for an enterprise value of around £9m after concluding that the business was "unlikely to achieve its medium-term return on capital employed targets". The group said it expected to incur an associated non-cash exceptional charge in 2013 of approximately £43m.Analysts at Bernstein have reportedly upped their view on the shares of Bernstein to 'outperform' versus 'market perform' beforehand. Pennon has been upgraded to 'outperform' over at Exane.NR