FTSE still suffering after yesterday's tumble

Those hoping for a rebound in the FTSE 100 this morning have been disappointed. The index has declined for a second successive day, after a tumultuous session yesterday that saw the London market fall by the largest amount in a month.

Call it disappointment from the Bank of Japan, or continuing worries about the situation in Ukraine, or simply a continuation of the momentum selling that started on Friday, but for whatever reason the market continues to lose ground.

A second consecutive day with little corporate news means that traders are picking off some of the more exposed names on the list. Previous star performers such as Sports Direct and Associated British Foods are being hit hard, with the former losing 6% as Mike Ashley cuts his stake in order to raise cash, while the latter has now shed all the gains made since mid-January. Retail was one of the best-performing sectors in the first quarter, but the result of this was that many names were trading at chunky valuations, making them vulnerable to any momentum-driven selloff.

For now, the 6600 level has held in London, but should this be taken out we are likely to see the FTSE 100 again retest the March lows around 6500. Investors could have been forgiven for thinking the latest slump had run its course, but this new drop suggests sentiment remains fragile at best.

Looking to the US open this afternoon, earnings season comes into focus. As in the UK, those companies trading at something of a premium will feel vulnerable in the present market volatility. Alcoa’s earnings come up after the bell this evening, and investors, who have seen the stock rise significantly since the company was ejected from the Dow Jones, will be hoping the latest figures will be better received than those published in January. Ahead of the open, we expect the Dow to start 17 points higher at 16,262.

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