Markets hold firm after another rate rise week, NatWest profit beats expectations, BA parent regains focus, and Rightmove posts best H1 since 2018

“Another week, another round of interest rate hikes. Under the circumstances, markets have held up remarkably well. As the trading week draws to a close, European stocks are doing their best to stay firm while pre-market indicative prices suggest a decent showing from US markets when they open on Friday,” says Russ Mould, Investment Director at AJ Bell.

“Standard Chartered jumped to the top of the FTSE 100 leader board after lifting its profit guidance and announcing a $1 billion share buyback. Its 5% share price gain was in stark contrast to the negative market reaction this week to other London-listed banks, with shares in Lloyds and Barclays both falling on their results and NatWest shares barely moving.

“AstraZeneca was in-demand after second quarter results beat estimates. That helped to breath some life back into its share price which had previously found it hard to break out this year.”

Natwest

“While indiscretion may have led to her departure the latest results from NatWest suggest former CEO Alison Rose was making a decent fist of her day job.

“After years of struggle following its forced nationalisation during the 2007/8 financial crisis, Rose had probably got the bank as close to normality as any of her predecessors and there will be real frustration that NatWest is back in crisis mode, undoing much of that good work.

“This is not an unblemished update. The trimming of guidance on the company’s net interest margin hints at the problems for banks, under big political and regulatory pressure, of charging more to borrowers without offering more to savers too, particularly with mounting competition in the savings market.

“And, while earnings beat expectations, this reflected several one-off items and did not reveal too much about the underlying performance of the bank.

“The scandal over confidentiality and the way it has played out is a reminder to other investors that the Government remains a major shareholder and, as such, has real influence on the way the bank is run. This is not a reminder the market is likely to receive positively.

“While bad debts remain under control for now, the pressures on UK households are acute and this remains an issue which could flare-up for NatWest and the other banks.”

International Consolidated Airlines

“The rebound in travel demand is old news and so it is no surprise to see the company behind British Airways move from a loss to profit.

“What matters to the market is how quickly International Consolidated Airlines is paying down its debt, the health of forward bookings, the disruption from fires across Europe and how it is dealing with cost pressures.

“On that front, debt is now at more manageable levels, forward bookings seem fine but not outstanding, wildfires are not even mentioned in the results, and cost pressures seem less of a problem.

“Weakness in its cargo operations remains a thorn in its side and that is something to watch if we see a sharp slowdown in the global economy. A slow recovery in business travel is also a headwind for the airline.

“During the pandemic the airline was in a pickle as demand dried up and its debt ballooned. Now, with both of these issues being addressed, it can focus on strengthening the business and planning for the future.

“Hiring more staff and leasing extra planes as back-up will help provide some resilience and money ploughed into IT systems and airport lounges is also a sign that International Consolidated Airlines is regaining focus and not simply trying to get through one day at a time.”

Rightmove

“Property listings platform Rightmove may have just chalked up its best first-half performance since 2018 but a drop in people using the site says something about the state of the property market.

“It has performed well through previous housing market downturns and arguably estate agents might be even more reliant on their Rightmove subscription if times get tough.”

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