FTSE 100 preview: Downtrend to continue as North Korea tensions persist

Royal Mail faces vote on industrial action

FTSE 100 preview: Downtrend to continue as North Korea tensions persist

Britain’s blue-chip index looks set to extend the previous session’s losses this morning, with tensions related to North Korea continuing to weigh on market sentiment around the world. Royal Mail Group (LON:RMG), which is set to leave the FTSE 100 next week, will be in focus on the corporate front today, with staff voting on industrial action.

IG’s opening calls suggest that the UK benchmark index will start the day 0.34 percent lower at 7,348 points. The blue-chip index looks set to take cues from the US where stocks tumbled as investors returned from a three-day weekend to news that Pyongyang had successfully tested a hydrogen bomb.

“North Korea’s successful hydrogen bomb explosion over the weekend” is “adding to the uncertainty,” said Jeff Saut, chief investment strategist at Raymond James, as quoted by CNBC. “Our sense is that if there is going to be a downside feint it should begin this week.” Asian shares have tracked the US lower this morning.

The FTSE 100 lost ground yesterday, shedding 38.55 points to close 0.52 percent lower at 7,372.92, pressured by lingering geopolitical worries and downbeat economic data. Provident Financial Group (LON:PFG) was the session’s biggest faller in percentage terms, losing 6.54 percent, with selloff in the shares continuing in the wake of last month’s profit warning.

There are no major macroeconomic releases out of Europe to guide the market this morning. In the US, the nation’s trade balance for July is due out at 13:30 BST, to be followed by the ISM non-manufacturing purchasing managers’ index for August at 15:00 BST. In company news, Barratt Developments (LON:BDEV) and Berkeley Group (LON:BKG) are scheduled to post results this morning. Sky News meanwhile reports that members at the Communication Workers Union at Royal Mail are set to vote on industrial action on a series of outstanding issues including pay and pensions.

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