European shares have been staging a modest recovery on Thursday after a huge sell-off on Wednesday that took the FTSE 100 down over 200pts into bear market territory.
The recovery seen in European share on Thursday began in part during US trading on Wednesday when the Dow Jones bounced off declines of over 400 pts alongside the price of US crude oil which moved back above $27 per barrel, a price not seen since 2003.
Royal Mail (L:RMG) has stamped its authority on the UK stock market with its shares seeing their best day in two months and rising to the top of the FTSE 100 after the postal service delivered a good set of Christmas numbers.
Royal Mail delivered 130m parcels in December, a 6% rise over last year. Over the past nine months parcel volumes rose 4%, offsetting a 3% decline in letter volumes. The UKPIL division, which consists of Royal Mail and Parcelforce saw revenues declines by -1% but group revenues increased 1% thanks to a strong performance from its European GLS division.
Royal Mail remains under competitive pressure but can’t take the go-to corporate cost-saving measure of slashing jobs because of its deal with unions and restrictions due to its universal service obligation. The better than expected letter and parcel volumes at UKPIL and GLS over the Christmas period along with Chief Executive Moya Greene’s expectation that the reduction in operational costs is on target show Royal Mail moving in the right direction. Royal Mail shares are coming off 10-month lows but relative to the FTSE 100 at 3-year lows is actually doing ok.
US stocks look set for another weaker start ahead of earnings from Verizon (N:VZ), American Express (N:AXP) and Starbucks (O:SBUX). Shares of Twitter (N:TWTR) could be active again after rumours circulated on Wednesday that News CorpB (O:NWS) has been building a stake.
USA pre-opening levels
S&P 500: 10 points lower at 1,849
Dow Jones: 76 points lower at 15,690
Nasdaq 100: 25 points lower at 4,111
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