Lloyds and Next

“The FTSE 100 traded materially lower on Wednesday, with fears of a renewed escalation in trade fears taking a bite out of any positive sentiment created by Apple’s strong earnings report,” says AJ Bell Investment Director Russ Mould.

Lloyds

“It may seem strange given the volatility the sector has endured in the wake of the global financial crisis but historically banks were often sought out by investors for the reliable stream of dividends they delivered.

“Lloyds is working increasingly hard to win back its reputation as a genuine income play and today’s first half numbers feature a healthy 7% increase in the dividend.

“The hike in the payout accompanies a strong set of results only slightly marred by a £460m provision against PPI claims. This issue should be put to bed in the relatively near future given the August 2019 deadline for claims to be made.

“A more pressing risk going forward is the fall-out from Brexit given the company’s big exposure to the UK economy and specifically to consumer debt.”

Next

“Next chief executive Simon Wolfson is justly known for providing cautious guidance and this looks to be reflected in today’s first half trading update from the retailer.

“Despite enjoying better than expected trading in the second quarter thanks to the warm weather, the company’s full year guidance remains unchanged. Wolfson and his management team prudently judging that spending may have been pulled forward from a traditional splurge in August.

“Investors seem to be taking this warning to heart, although it is worth noting the company upgraded guidance after the better-than-expected first quarter performance announced in May.

“A notable bright spot, given the structural shifts in the retail industry, was a slightly better than forecast 12.5% increase in Q2 online sales.

“This was lower than the first quarter’s 18.1% build, reflecting the easier comparative with a weak set of numbers for the first three months of 2017.”

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