FTSE tumbles as pound rallies

Chris Beauchamp IG

The FTSE 100 is in the red in early trading, down 30 points, with Royal Mail languishing at the bottom of the index.

Rallying pound drags FTSE lower
Royal Mail issues dismal update
Oil looks in vain for a bounce

Rising home currencies continue to hit the FTSE and eurozone markets, despite Janet Yellen’s best efforts last night to talk up the dollar and the chances of rate hikes aplenty. Her efforts seem to have lasted only a few hours, with the greenback in retreat and lifting the pound and the euro. We are seeing stock markets in retreat across the board this morning, with the FTSE 100 hitting its lowest level since 9 January. This doesn’t sound like much, but there are clear signs of investor fatigue and nervousness, especially with Trump’s ascension to power just hours away. Royal Mail’s RNS this morning was a masterpiece of corporate-speak, with a commendable effort to disguise a 5% drop in letter volumes overall failing to inspire investors. The shares are down 5%, contributing to the generally gloomy atmosphere in London this morning.

After its drubbing yesterday crude oil has only managed a measly rally. After OPEC’s hint that more production cuts will be needed, attention turns to the US inventory report this afternoon. Any sign of healthy growth in stockpiles threatens to push WTI lower still, back below the key $52 level as oversupply concerns dominate once again. Ahead of the open, we expect the Dow to start at 19,789, 15 points lower from Wednesday’s close.

Author

Chris Beauchamp

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