FTSE 100 preview: Royal Mail Q1 update in focus

on Jul 21, 2015

The FTSE 100 is expected to edge higher this morning, after softness in commodity markets kept a lid on gains yesterday. The index closed the last trading session 0.20 percent, or 13.61 points, up at 6,788.69, with investor sentiment subdued by a drastic drop in gold and oil prices. According to trading platform IG, today, the Footsie will open around seven points higher at 6,795.

A further considerable improvement in UK public finances will be in focus today, in an otherwise very quiet day for scheduled economic data. The UK public sector net borrowing (PSNB) figures for June will be released by the Office for National Statistics at 09:30 BST. UK PSNB excluding banks is forecast to be around £8.9 billion for the last month — down from the £10.1 billion published for May, which was lowest level since mid-2007.

Investors will also continue to keep an eye on the situation in Greece, where banks reopened as Athens began the process of paying off billions of euros owed to international creditors after it agreed to a new reform plan in exchange for another bailout to keep it in the Eurozone.
On the corporate front, Royal Mail (LON:RMG) is due to publish an update on its first quarter trading performance today. With Q1 a fairly “small” quarter for Royal Mail, UBS said it expects trends to be in-line with forecasts for the full year, which are for letter volumes to be down four percent and letter revenue down three percent, while parcel volumes are expected to rise 1.5 percent and revenue 0.5 percent for the full year. “We believe the market will be focused on any change in tone regarding the state of the parcel market – which has been generally cautious on both volumes and price,” UBS said.
US stocks posted modest gains yesterday, as investors digested earnings reports. The Dow Jones Industrial Average closed or 0.08 percent up at 18,100.41, the S&P 500 was also 0.08 percent better off at 2,128.28, while the Nasdaq rose 0.17 percent to a new record high of 218.86.
Taking heart from fresh gains on Wall Street, Asian shares edged higher overnight. By 06:50 BST, Tokyo’s Nikkei 225 had declined 0.84 percent to 20,825.23, as markets reopened after a public holiday on yesterday, climbing to three-week highs on growing expectations for strong first-quarter earnings. Meanwhile, the MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.35 percent up at 568.80, after wavering between positive and negative territory for much of early trading.

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