21st Jul 2015 06:38
LONDON (Alliance News) - London share prices are set to open flat Tuesday, after gains on Monday were capped by the decline in the price of gold and other commodities and with company earnings and trading updates in the UK and the US likely to hold investor attention.
IG says futures indicate the FTSE 100 to open 2 points higher at 6,791.6. The index closed on Monday up 0.2% at 6788.69.
"European markets underwent a fairly subdued session yesterday with the FTSE 100 in particular struggling to make much headway above 6,800 due to continued weakness in commodity prices, with the sudden accelerated drop in the gold price knocking chunks out of the mining sector," says CMC Markets chief market analyst Michael Hewson.
"A stronger US dollar, along with lower demand expectations has knocked commodity prices for six in the last few months, with gold playing catch up yesterday, falling below USD1,100 for the first time since 2010, as the prospects for a rise in US [interest] rates against a benign inflation backdrop saw gold traders pile out of the yellow metal in the past few days," Hewson says.
Oanda analyst Craig Erlam says gold prices appear to have stabilized somewhat following some heavy selling in China at the start of the week.
"Still, the path of least resistance appears to remain to the downside and most people seem to be in agreement," writes the analyst. "While that can often actually be a bullish signal with a trade being overcrowded, I?m not convinced this is the case on this occasion."
Gold is quoted early Tuesday at USD1,102.60 an ounce. Meanwhile, the pound is slightly higher against the dollar Tuesday morning at USD1.5571.
In Asia on Tuesday, the Japanese Nikkei 225 closed up 0.9%. In China, the Hang Seng is up 0.7% and the Shanghai Composite is up 0.8%.
With little to focus on in the economic calendar Tuesday - UK public sector net borrowing and US Redbook index are due at 0930 BST and 1355 BST, respectively - company news is likely to grab most of the market's attention.
US tech giants Apple, Microsoft or Yahoo are set to report results Tuesday, following IBM, which reported results Monday after the market close. It said that its second quarter profit fell 17% from last year, as revenue declined 13.5%.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, IBM maintained its full year operating earnings outlook. The company now expects a modest increase in free cash flow, improved from its prior expectation of flat.
Wall Street ended higher Monday. The DJIA and the S&P 500 both ended up 0.1%, and the Nasdaq Composite closed up 0.2%, reaching a new record closing high of 5,218.85 points.
In London, Royal Mail on Tuesday said its group revenue was flat in the first quarter of its current financial year, with a good performance in its parcels and logistics businesses but weaker revenue from its letters business.
The FTSE 100 postal service operator said its group revenue for the three months to June 28 was flat. Royal Mail said revenue in its UKPIL division, which covers its UK parcels and letters delivery business, was down by 2%, as revenue in its UK parcels arm rose by 2% but revenue from its letters business fell by 4%. UK parcels volume rose by 3% in the quarter, while letters volume fell 5%.
Meanwhile, specialty chemicals company Croda International said its pretax profit rose in the first half of 2015 on the back of better revenue across its operations, prompting it to hike its interim payout.
The FTSE 250-listed company, which makes surfactants used in ingredients for cosmetic creams and lotions and for dietary supplements such as Omega-3 oils, said its pretax profit for the six months to June 30 was GBP135.6 million, up from GBP125.1 million a year earlier.
Greece cleared on Monday its first hurdle in the bailout crisis by repaying the money due to the International Monetary Fund and the European Central Bank with the European Commission's EUR7.16 billion bridge-loan, and banks in the crisis struck country opened partially despite stock exchange closure.
In addition, the Greek government also paid money owed to the Greece's central bank. In total, the government repaid EUR6.8 billion to its creditors. In an official release, Gerry Rice, Director of Communications at the International Monetary Fund, confirmed that Greece repaid the totality of its arrears worth about EUR2.0 billion to the IMF.
"Greece is therefore no longer in arrears to the IMF. As we have said, the Fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth," said Rice.
By Daniel Ruiz; [email protected]
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