London pre-open: Stocks to fall further as sell-off continues

1st Apr 2015 07:53

UK stocks are set to extend losses on Wednesday morning following a huge sell-off the previous session that sent the Footsie to its lowest in over two and a half weeks.City sources predict the FTSE 100 will open 20 points lower than Tuesday's close of 6,773.04.The index dropped 1.7% to its lowest finish since 13 March on Tuesday as quarter-end rebalancing and weak European economic data hammered risk appetite, with mining stocks in particular falling sharply."Tuesday's sell-off in Europe has been largely put down to end of quarter profit taking by investors, following an incredible first quarter, so you could be forgiven for expecting stocks to continue their ascent today," said Oanda analyst Craig Erlam."Early indications, however, suggest that is not going to be the case which is fairly unusual with the first day of the second quarter usually being a good one for stock markets."In economic data, China's official purchasing managers' index (PMI) for manufacturing showed that activity rose for the first time in three months, though HSBC's own survey showed that the sector remained in contraction. The mixed result saw Chinese shares rally overnight in anticipation of further stimulus measures from Beijing.Manufacturing PMIs from Europe, the UK and US are all due out later on Wednesday.Stocks to watchAsos saw profits fall by a tenth in the first half as a sharp drop in margins outweighed a strong sales performance, though the online fashion retailer believes momentum is building because of its recent investments in price cuts and so-called 'zonal pricing'. Pre-tax profit was down 10% at £18.04m in the six months to 28 February as a result of a retail gross margin decline of 270 basis points to 46.8%.FirstGroup confirmed trading for the year to the end of March had remained in line with expectations, with progress continuing on its medium-term transformation plans. UK rail and First Transit remained solid, while Greyhound continued to manage its cost base in the face of lower demand due to cheap gas.