European shares set to open significantly lower.

Equity investors find themselves attacked on more than one front this morning, with the U.S. budget, Italian politics and China being reason enough for an early run to the exit. Shares across Europe are set to open significantly lower in light of the developing news flow.

While this combination of news flow is concerning, the price action following the open will be critical in determining near-term momentum. If, for example, prices are supported and buyers step in, investors will be harder to part from their stock than if the contrary occurred. But either way, Investors have been caught a little off guard.

Unsurprisingly, safe haven assets have been the destination of a lot of the cash leaving risk assets. High quality fixed income, Swiss francs and dollars have been in demand against this sell-off and will continue to be so until a catalyst can stabilise or reverse sentiment.

What certainly won’t help equity bulls is how far valuations are stretched already.

Risers:

Barratt Developments, up 2.2% Barratt Developments raised to overweight from neutral by JPMorgan Cazenove. The majority of UK house builders traded higher this morning after prime minister David Cameron’s announcement that the second part of the government’s “Help to Buy” scheme will launch next week. Shares in Barratt rallied the most in early trading Monday following the weekend announcement.

Persimmon, up 2% Shares in Persimmon have been helped this morning after a stock upgrade from JPMorgan Chase & Co. They upgraded the rating on the house builder to “overweight” in a report issued today with a 1250p price target on the stock, down from the previous 1275p price target. The new price target suggests a 17.81% from the stock’s previous close.

William Hill, up 1.6% William Hill has received a new rating this morning with Deutsche Bank rating the stock to a “buy”. The firm holds its currency 475p price target on the stock.

International Ferro Metals, up 5% International Ferro Metals has posted pre-tax losses of ZAR126m for the year to the end of June, up from ZAR72m last time. The group reports a strong turnaround in the second half performance through realised operational efficiencies and strengthening ZAR FeCr prices. Chief executives Chris Jordan states “2023 financial year was one of two halves. Following market and operational challenges in the first half, which IFL tackled vigorously, the second half was much stronger, with the Company continuing to make significant progress with its cost reduction programme as well as increasing revenues from our strengthened sales and marketing operations.

Avon Rubber, up 3.2% Avon Rubber PLC, a manufacturer of respiratory protection products, said Monday that the strong fourth quarter trading in the Protection & Defence division is expected to raise Group full year adjusted operating profit ahead of current market expectations. WH Ireland increased their price objective on shares of Avon Rubber from 530p to 590p. WH Ireland currently has a buy rating on the stock.

Fallers:

Salamander Energy, down 13% Oil group Salamander Energy PLC (SMDR.LN) said Monday that its SPHE-1ST well in Thailand has successfully tested gas from the Permian-aged Pha Nok Khao reservoir, adding that the flow rate is commercial. The flow rate is commercial and is among the best production rates seen in the field; shut-in pressures indicate that the drilled reservoir is in communication with the main Sinphuhorm gas field. Jefferies Group reiterated the Buy rating this morning with their current 280p price target.

MJ Gleeson Group, down 2.5% Urban regeneration specialist MJ Gleeson Group said revenues were up 49% at £60.7m in the year to end-June, while operating profit more than doubled to £6m and a final dividend of 2p per share was proposed. Chairman Dermot Gleeson says: 'The Group has continued to expand and strengthen its presence in the two areas of the housing market in which it now operates: urban housing and regeneration on brownfield sites in the North of England, where we are market leaders, and the promotion through the planning system and subsequent sale of high value green field sites in the South of England. 'Forward orders are significantly ahead of last year and we are confident that, barring an unexpected deterioration in economic conditions, we will achieve further significant growth in revenue and profit in the current year and beyond.'

Drax, down 2% Shares in the electricity generator, Drax group drop over 2 percent after Societe Generale cuts Drax’s rating to hold from buy.

Albemarle & Bond, down 44% The a pawn broking, financial services and jewellery businesses, has announced that on-going weakness in gold prices has created significant uncertainty over the company's prospects for the current financial year to June 2014 and its profitability. This meant there was a high risk of the company breaching some of the debt agreements it has with banks, it added. The company is now in discussions to raise £35m through an issue of new shares.

ViaLogy, down 29% ViaLogy PLC has announced they will seek new funding to push ahead with an expansion through new partnerships and a restructuring of the business, as it reported narrower loss for its last financial year but warned it also needs money to support its current business. The company has since raised £1.4m through a placing in February and is now evaluating a number of avenues to provide the firm with financial future. If funding is not obtained, there will be uncertainty about the business they said.