FTSE 100 on course to end week on a high ahead of US inflation reading, Mercedes lowers margin guidance, NatWest beats forecasts and raises guidance and robust results from Rightmove

“The FTSE 100 looks set to end the week on a high despite a continued sell-off in US tech names,” says AJ Bell Head of Financial Analysis Danni Hewson.

“After a week dominated by the reaction to US corporate announcements, attention may shift back to the macro-economic backdrop later with the release of Core PCE data – the Federal Reserve’s preferred measure of inflation. The market will be hoping for a reading which reinforces hopes of a rate cut at the Fed’s September meeting.

“Mercedes-Benz brought a truly dreadful week for the automotive industry – taking in damaging updates from Tesla, Ford and Porsche – to a close with its own disappointing missive. The company lowered its annual profit margin forecast after weak second-quarter sales.

“There may be some relief the statement wasn’t worse with a more serious profit warning anticipated in many quarters. But, like its peers, Mercedes faces an electric vehicle conundrum, with uptake slowing in the West and big competition in China from domestic players.”

Natwest

“NatWest’s long, long recovery from the financial crisis looks as meaningful as it has done at any point in the last 16 years or so with the company’s latest results including plenty to like from the point of view of shareholders.

“Unlike Lloyds, whose own better than expected numbers received a muted response from the market, NatWest is not only benefitting from lower impairments but also higher than anticipated income and the company not only beat on the second quarter but it is lifting guidance for the full year too.

“Notably the company is feeling confident to go on the offensive – boosting its position in the UK mortgage market with the acquisition of a chunky portfolio from Metro Bank. This follows on from the recent purchase of Sainsbury’s Bank.

“The company has enjoyed strong share price gains so far this year despite the overhang presented by the UK government’s stake. This has been reduced by consistent selling through the course of 2024 from 38% to less than 20%.

“Conservative plans to launch a public share offer in NatWest may not now come to fruition with Labour chancellor Rachel Reeves reported to be leaning towards a plan of offloading a big chunk of the government’s remaining stake to institutions.”

Rightmove

“The housing market may still be fairly fragile but the latest results from property listings site Rightmove are very robust.

“There had been concern about the competitive threat posed by rival OnTheMarket after its takeover by US firm CoStar but these numbers show Rightmove is successfully preserving its dominant position, for now at least.

“Being the market leader creates a virtuous circle for Rightmove. Its site has the most listings and is therefore the one which prospective property buyers will go to first when looking for their next home. This reinforces its position as a must-have product for estate agencies and gives it significant pricing power when it comes to securing subscriptions.

“This is reflected in continued growth in monthly average revenue per advertiser – a key metric for Rightmove. Recognising it cannot rest on its laurels, Rightmove is investing heavily in new innovations and data insights which can entrench its position with existing clients and allow the company to upsell customers to pricier subscriptions.

“The company also has a footprint in the lettings market and with housebuilders – although the latter market remains pretty subdued right now.

“Rightmove still needs to be wary of the competitive threat posed by the likes of OnTheMarket and Zoopla but if it can perform solidly against a difficult backdrop, investors will hope it can really impress when the winds are in its favour.”

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