Trade news the only show in town

Summary:

• Equities look to recover on trade hopes

• FTSE trades in the middle of recent range

• Royal Mail swoons after posting latest results 

Recent moves in stock markets seem to be almost solely driven by the latest developments in  US-Sino talks with equities getting a lift this morning after another headline crossed the wires. It’s quite remarkable that stock markets in not only New York and Shanghai, but also London and Frankfurt have such a heightened level of sensitivity in the near term to any news on this front, with quotes from the respective sides having a near instant impact in the markets. 

Taking a step back it’s clear there’s been a clear positive shift over the past 12 months in US-China trade, but a lot of this change in opinion has been caused by rhetoric rather than action and earlier this week we saw investors getting just a little jittery on reports that progress may not actually be made. The declines were measured in the grand scheme of things and the bull market remains firmly intact for now with European and US benchmarks both still sitting on 20%+ gains year-to-date.

The FTSE is trading pretty much slap bang in the middle of its recent range with 7000 still providing technical support and 7450 offering resistance. The market has declined in the past two sessions but has moved off its lowest level in a month this morning, boosted by some positive comments on trade. Source: xStation  

Royal Mail delivers unwanted update

Shares in Royal Mail have swooned by more than 15% after the firm posted its latest trading update, leaving the stock languishing at the bottom of the FTSE 250 index. The struggling UK business continues to be a millstone around the neck, with transformation plans said to be behind schedule as the shrinking market for letters gives way in terms of precedence to parcel delivery. On the face of it the latest overall figures were pretty good with pre-tax profit jumping to £173M in the first half of the year from £33M in the corresponding period in 2018, while revenue growth was also pretty solid. 

Turnover of £5.2B marks an increase of just over 5% with the parcel side of the business leading the gains. Another negative aspect that has outweighed the positives is the threat of industrial action with workers threatening to strike over the busy Christmas period. After posting this bad news the stock is flirting with its lowest level on record and has slumped back below the £2 mark. With shares having fallen around 70% in the last 18 months it is clear that the 500-year old institution hasn’t delivered anywhere near the level of performance that investors would have hoped.   

Royal Mail shares have dropped by more than 15% this morning after the firm posted its latest trading update. The stock is now close to its lowest level on record and well below the IPO price of 330. In the past 18 months the market has tumbled by approximately 70% after peaking in May 2018 above 6.30. Source: xStation