FTSE 100 preview: Index seen higher as sterling drops

on Jun 1, 2017

The UK benchmark index looks set to kick off June on an upbeat note, despite downbeat leads from the US and Asia, as sterling lost ground ahead of next week’s general election in the UK. Royal Bank of Scotland Group (LON:RBS) will be in focus as it seeks to draw a line with a dispute with investors suing the lender over its disastrous cash call during the financial crisis.

CNBC reports that the FTSE 100 is seen opening 14 points higher at 7,533. The Footsie is likely to find support in pound weakness, which supports companies with international exposure, as Reuters reported that sterling had retreated this morning amid fears that Prime Minister Theresa May could lose control of parliament in the June 8 election. In the US, stocks closed lower last night, pressured by a drop in financials, while shares in Asia have been mixed this morning following downbeat data out of China, the world’s second-biggest economy.

The Footsie closed little changed yesterday, shedding 6.56 points to end the session 0.09 percent lower at 7,519.95, pressured by a selloff in mining shares. Rio Tinto (LON:RIO) was the session’s biggest faller, closing 2.53 percent lower.
Investors have a lot to look forward to on the macroeconomic front today, with the UK manufacturing purchasing managers’ index (PMI) for May scheduled to be released at 09:30 BST. In the US, the ADP employment change for May is due out at 13:15 BST, to be followed by the US ISM manufacturing PMI at 15:00 BST. In corporate releases, Johnson Matthey (LON:JMAT) will post its full-year results this morning. In other news, Reuters reported yesterday that RBS was in talks with the last claimants in the lawsuit over its 2008 fundraising.

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