FTSE 100 higher despite weaker oil prices, markets await Magnificent Seven earnings, Lloyds responds to adverse motor finance ruling and Trainline lifts guidance

“The FTSE 100 ticked up on Monday morning ahead of a busy week which includes the Budget and results from some of the big US tech companies,” says Danni Hewson, Head of Financial Analysis at AJ Bell.

“The gains for the index were impressive given heavyweight constituents BP and Shell were dragged lower by weak oil prices. Traders don’t appear to be anticipating an escalation of tensions after Israel’s strikes on Iran. Airlines were in demand, along with retail stocks.

“A good chunk of the Magnificent Seven report their quarterly earnings this week so it could be a pivotal few days for the markets given their collective weighting in US indices. Though any tone they set could almost immediately be supplanted by the outcome of next week’s US election.

“There was further evidence of recovery in the UK property market as prices continue to rise, although there is anxiety about a potential rollback of stamp duty relief in Wednesday’s Budget.”

Lloyds

“Lloyds was in damage control mode on Monday morning after Friday’s ruling on motor finance commission arrangements at the Court of Appeal potentially broadened the scope of the scandal.

“This will increase nervousness ahead of the FCA’s own probe into the issue and potentially prolong the agony for Lloyds and the other names affected. If the regulator does adopt a wider lens thanks to this latest ruling then the results of its investigation may well come in later than May, which was when a judgement had been expected.

“For now, Lloyds has put out what is very much a holding statement, with the shares only showing limited damage this morning after a more meaningful slump on Friday afternoon. It will be telling to see if the company proactively increases any provisions made for compensating customers, although given the remaining uncertainties quantifying the impact will be tricky.

“While Lloyds is not a participant in the Court of Appeal case, it is notable that those which are, including Close Brothers, intend to further appeal this latest ruling at the UK Supreme Court. All told, any glow from Lloyds’ better-than-expected quarterly numbers last week has well and truly disappeared.”

Trainline

“Rail ticketing platform Trainline continues to chug along at impressive speed as it lifts its full-year outlook.

“The company is benefiting from operating leverage, with its costs not going up as quickly as revenues, as it builds on an already dominant market position in the UK and expands in Europe.

“The company makes money by earning a commission and fees on ticket sales and generating revenue from advertising and ancillary services like insurance. While in theory there aren’t huge barriers to entry to competition, Trainline now has an established brand and platform which others might struggle to match.

“The potential threat of a state-backed ticketing rival in the UK remains but it does not seem to be a priority for the current government. Rail nationalisation could also complicate things but these remain problems for another day, with Trainline doing pretty handsomely right now.

“Investors will be looking for more detail on how the business is performing when it announces its first-half results on 7 November.”

These articles are for information purposes only and are not a personal recommendation or advice.