Friday hangover afflicts Monday's markets

In mid-morning trading the FTSE 100 is down over 65 points, as European markets catch up with US markets' Friday moves.

Friday’s aggressive sell-off in the US markets has weighed heavily on trader sentiment this morning, although without the impact of VOD and BG the FTSE 100 would only have been off by 20 points in the first hour of trading. A combination of factors has caused markets to squirm, including the contraction in Chinese growth last week and the expectation of further cuts in the FOMC’s debt-purchasing scheme later this week. Once again EU finance ministers are meeting in Brussels. However, the biggest issues worrying them in terms of the region's recovery will arguably be outside the EU borders.

BG Group and Vodafone have certainly contributed the lion’s share to this morning’s FTSE sell-off. After an hour of trading, BG Group shares are down 14% on the day following the company downgrading its guidance for both 2014 and 2015. This change in outlook has resulted from disappointing US figures and an Egyptian crisis that has left the company with no option but to declare a 'force majeure'.

The news that AT&T Corp has ruled itself out of any possible bid for Vodafone has taken the market by surprise, especially as the CEO had made a number of comments relating to the potential of mobile broadband markets in Europe. Speculative investors had been positioning themselves for the prospect of a tie-up, and this morning’s scramble to unwind positions has seen Vodafone shares shed almost 5%.

Friday's sell-off on Wall Street was the biggest the markets have seen since late June 2013, but still it may not have been enough to quench the market's bloodlust, as future indications are for more falls. Today’s US corporate news will be provided by Royal Caribbean Cruises, Caterpillar, United States Steel and Apple, all of which will be posting quarterly figures. Ahead of the open, we expect the Dow Jones to start eight points lower at 15,871.

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