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FTSE 100 makes flat start as Royal Mail looks poised for promotion into the blue chip index

·3-min read
 (Getty Images)
(Getty Images)

The FTSE 100 was set for a flat start today while investors eyed whether Royal Mail was set to be promoted into the top flight index.

Currently positioned at 93 in the market capitalisation stakes with a value of £5.74 billion, the FTSE 250 postal group is owned by huge numbers of retail investors since its flotation at 330p in 2013.

It sits way above current FTSE 100 stragglers Renishaw at £4 billion, Avast, at £4.7 billion, Weir at £4.8 billion and British Land at £4.87 billion.

AJ Bell, which crunched the numbers, said there would be one demotion and one promotion when the reshuffle is announced in a week’s time, but with volatile markets, the current stakes could change dramatically in that time.

Renishaw, AJBell pointed out, only scraped into the index last time on the very final day before the new league was measured, and that was because it announced the company was up for sale.

Royal Mail is at its highest levels for three years, having enjoyed decent parcels revenues thanks to the move to home shopping. This week has seen brokers upgrade their profit forecasts, with JPMorgan and Peel Hunt both joining the fan club.

The FTSE was set for a flat start, with the IG trading platform calling it down 1.8 points at 7035 despite having seen Asian shares enjoy a decent showing this morning.

Inflation fears ebbed somewhat in the US after Federal Reserve vice chairman Richard Clarida said the Fed was confident it could deal with any outbreak of price rises to bring what he called a “soft landing” without wrecking the economic recovery.

Despite the apparently soft tone of his words to the average listener, markets saw them as a significant shift from Fed chairman Jerome Powell, who last week said it was “not time” to even contemplate talking about tapering off the central bank’s super-easy monetary policy.

US shares were slightly down, with the Dow Jones Industrial Average and S&P 500 both off around a fifth of a percent although the tech-laden Nasdaq ended flat.

Gold prices are on the march, hitting four and a half month highs as traders use it as a hedge against the threat of inflation. Many in the market are getting concerned at current highs, however, and are increasingly betting on a retrenchment.

Gold miners’ shares will move accordingly.

In the opposite direction, Bitcoin has been gaining ground after last week’s rout. In the past 24 hours it is up 3% at $39,403 - still way off its early May highs near $60,000. As ever, nobody really knows why.

Close Brothers could have a decent session after Jefferies analysts upgraded their view on the bank from Underperform to Hold and a target price of 1613p from today’s 1500p. New lending is strong and Winterflood, its smallcap brokerage, has been performing well.

IP Group could benefit as the same broker hosts a genetics expert, Dr Andrew Sharp of Mount Sinai School of Medicine in New York, to discuss Oxford Nanopore Technologies’ genetic sequencing technology. IP is a 14.5% shareholder in ONT, which is planning to float in London later this year.

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