Author: Fiona Craig

Shares of Lloyds Banking Group (LSE:LLOY), Close Brothers (LSE:CBG) Group plc, and other UK lenders saw gains after the Supreme Court issued a ruling impacting car finance charges, while the Financial Conduct Authority (FCA) prepares to consult on potential compensation plans.

By 10:45 a.m., shares in Lloyds, Close Brothers, Secure Trust Bank, Barclays (LSE:BARC), S&U PLC, CBRO, STBS, and SUS had risen between 2% and 19%.

The Supreme Court’s decision, delivered last Friday, overturned important parts of a prior Court of Appeal ruling in the cases of Wrench, Johnson, and Hopcraft. The court determined that car dealerships acting as credit brokers do not owe fiduciary duties to customers, and commissions paid in such transactions are not considered bribes.

However, the court ruled in Johnson that an unfair relationship existed between lender and borrower under the Consumer Credit Act 1974.

The judgment highlighted that whether an arrangement is unfair depends heavily on the details of each case. In this instance, the court ordered repayment of the commission along with commercial interest to the claimant.

Lloyds stated its existing motor finance provisions already accounted for various possible outcomes, including the Supreme Court’s ruling. Although the judgment clarifies issues around fiduciary duty and bribery, Lloyds cautioned that regulatory uncertainty remains, especially considering the FCA’s forthcoming actions.

On Saturday, the FCA announced plans to launch a consultation by early October on a potential industry-wide compensation scheme related to discretionary commission agreements. The regulator may also consider broadening the scheme’s scope to include other commission models.

Lloyds noted that, based on a preliminary review and pending the FCA consultation, any changes to its provisions are unlikely to be significant. The bank will continue to monitor the situation and keep the market informed.

Close Brothers Group plc and Close Brothers Finance plc, following up on their August 2 announcement, confirmed their awareness of the FCA’s planned consultation on an industry-wide compensation plan.

The group welcomed the consultation process and indicated it intends to actively participate in discussions with the regulator moving forward.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Shares of BP (LSE:BP.) climbed on Monday after the energy major announced a significant oil and gas discovery off the coast of Brazil, marking its largest find in a quarter-century. The discovery took place in the Santos basin, a deepwater pre-salt area known for its rich hydrocarbon potential.

This is BP’s tenth discovery this year, adding to previous successes in Trinidad, Egypt, and other regions. The company aims to increase its oil and gas production to between 2.3 million and 2.5 million barrels of oil equivalent per day by 2030.

Production hit 2.4 million barrels per day in 2024, though BP expects output to decline next year.

As of 09:47 GMT, BP shares were trading up 1.6% in London.

Initial tests from the drilling site revealed elevated carbon dioxide levels, with further lab work planned to evaluate the block’s full potential. BP intends to build a major production hub in the area, reinforcing its commitment to fossil fuels.

The announcement comes ahead of BP’s second-quarter earnings report, due Tuesday.

In related news, the Financial Times reported Monday that BP is set to provide updates on its $5 billion cost-cutting plan during the earnings call, amid pressure from activist investor Elliott Management to deepen expense reductions.

Elliott is pushing CEO Murray Auchincloss to boost efficiency efforts by adding another $5 billion in savings on top of the current $4 billion–$5 billion target set for 2027, according to the FT. These savings targets are based on 2023 spending levels.

The hedge fund has “identified tens of thousands of BP support staff globally” as part of the company’s cost structure, the report noted.

BP has already achieved $750 million in cuts this year and aims to meet the full target through workforce reductions, asset disposals, and simplifying supply chains, the FT added.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

U.S. equity futures ticked up early Monday as traders weighed soft economic data, mounting trade tensions, and the potential for a Federal Reserve interest rate cut. Robust corporate earnings continued to cushion markets against signs of a slowdown and policy uncertainty, while Berkshire Hathaway (NYSE:BRK.A) reported weaker profits following a major asset write-down.

Futures Rebound After Sharp Friday Sell-Off

After ending last week on a sour note, U.S. stock futures regained ground in early trading, buoyed by rising expectations of a rate cut. As of 03:00 ET, Dow Jones futures were up 128 points (0.3%), S&P 500 futures climbed 24 points (0.4%), and Nasdaq 100 futures gained 102 points (0.4%).

Friday’s session saw steep losses, especially in the S&P 500, which posted its worst daily drop in over two months. Sentiment was rattled by weaker-than-anticipated jobs data and President Donald Trump’s announcement of heightened tariffs targeting numerous trading partners.

Further market anxiety came as Trump abruptly dismissed the head of the U.S. Bureau of Labor Statistics, claiming without evidence that employment numbers were manipulated. Analysts flagged the move as a threat to the credibility of official data, raising questions about future transparency under a politically appointed replacement.

Following the disappointing employment report, traders increased their bets on a potential interest rate cut from the Federal Reserve as early as September. Still, according to several media reports, Fed officials remain cautious and are awaiting more economic indicators before adjusting their stance.

Solid Earnings Season Offers Market Support

Despite macro concerns, corporate earnings have largely delivered, reinforcing the bullish sentiment surrounding artificial intelligence. Tech heavyweights such as Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) have posted strong second-quarter results and reaffirmed their aggressive investment plans in AI infrastructure.

These earnings have helped mitigate investor concerns about the economic fallout from Trump’s tariff strategy, though some companies have warned that price increases may be necessary in coming months.

According to LSEG data cited by Reuters, S&P 500 companies are on track to post 9.8% year-over-year earnings growth for Q2, up from a forecast of 5.8% at the start of July. Over 80% of firms reporting so far have exceeded Wall Street estimates—well above the 76% average of the past four quarters.

This week, investors will be closely watching earnings from key Dow components including Caterpillar (NYSE:CAT), McDonald’s (NYSE:MCD), and Disney (NYSE:DIS), all of which may influence broader market sentiment as the index nears its all-time high from December.

Berkshire Hathaway Sees Profit Drop on Kraft-Heinz Write-Down

Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) reported a significant drop in second-quarter profit, driven by a $3.76 billion impairment on its Kraft Heinz (NASDAQ:KHC) stake and lower insurance premiums. Net income fell to $12.37 billion from $30.35 billion a year earlier, while revenue dipped 1.2% to $92.5 billion.

The conglomerate saw modest gains in equity holdings such as Apple (NASDAQ:AAPL) and American Express (NYSE:AXP), but those were overshadowed by weaker performance in its insurance business. However, operating income at BNSF, Berkshire’s railroad division, surged nearly 20%, supported by cost controls and reduced fuel expenses.

Berkshire ended the quarter with $344 billion in cash, slightly down from $348 billion but still near record levels. The earnings arrive as the company prepares for Buffett’s planned retirement at the end of 2025, with Vice Chair Greg Abel set to take the reins.

Oil Prices Hold Steady Despite OPEC+ Output Increase

Oil prices remained relatively flat on Monday, even after OPEC+ confirmed another sizeable production increase. Brent crude slipped 0.2% to $69.80 a barrel, while WTI rose 0.3% to $67.53 at 03:10 ET.

The group of oil-producing nations agreed to boost output by 547,000 barrels per day in September—consistent with previous hikes and signaling the full unwinding of earlier supply cuts equivalent to roughly 2.5 million bpd, or 2.4% of global demand.

Gold Softens as Traders Take Profits; Bitcoin Recovers

Gold prices were mixed in early European trade after Friday’s rally, which had been fueled by the weaker jobs report and increasing expectations of lower rates. Spot gold edged down 0.2% to $3,355.69 per ounce, while December futures rose 0.3% to $3,408.67.

The yellow metal had jumped over 2% on Friday, bouncing back after two consecutive weeks of losses. Meanwhile, Bitcoin rose 0.8% to $114,567.60, stabilizing after a 3% slide over the previous five sessions.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Crude prices slipped in Asian trading on Monday following OPEC+’s decision to ramp up oil production again in September. Concerns over a potential slowdown in the U.S. economy and uncertainties surrounding sweeping trade tariffs added further pressure to the market.

The downward momentum extended losses from Friday, driven by disappointing U.S. nonfarm payroll figures that signaled a possible cooling in demand from the world’s largest oil consumer. Additionally, investor sentiment remained fragile after President Donald Trump announced extensive tariff measures targeting at least 70 nations, sparking fears of global trade disruption.

By 21:40 ET (01:40 GMT), September contracts for Brent crude declined by 0.5% to $69.35 per barrel, while West Texas Intermediate (WTI) futures dropped 0.3% to $65.90 per barrel.

Despite Monday’s drop, crude benchmarks had seen modest gains the previous week, fueled by the U.S. threatening additional sanctions on Russian energy exports, a move that could tighten international supply lines.

OPEC+ Sticks to Gradual Output Strategy

On Sunday, the coalition of oil-producing countries known as OPEC+, including Russia and Saudi Arabia, agreed to raise collective output by 547,000 barrels per day in September. The decision mirrors the group’s August increase and continues a six-month streak of supply expansions.

This production strategy reflects the bloc’s efforts to unwind historic supply curbs introduced during the pandemic, with previous increases of around 548,000 barrels per day in August and 411,000 barrels per day in July.

The announcement renewed fears that rising global oil supplies could outweigh the tightening effects of U.S. sanctions on Russia, potentially leading to softer prices in the months ahead.

Signs of Slowing U.S. Demand Add to Bearish Outlook

In addition to OPEC+ developments, fresh labor market data from the U.S. cast doubt on future fuel demand. July’s nonfarm payrolls report revealed weaker-than-expected job growth, underscoring vulnerabilities in the broader economy.

Those concerns were magnified by the looming implementation of President Trump’s sweeping trade tariffs. Most of these duties are set to take effect in the coming days, adding layers of complexity to the global economic outlook.

Further dampening sentiment were recent figures from U.S. purchasing managers’ indexes, which signaled declining business activity—another negative signal for energy demand.

Nonetheless, some geopolitical tensions offered temporary support last week. Trump threatened to impose trade penalties on nations purchasing Russian oil, naming China and India specifically. He also escalated rhetoric around the conflict in Ukraine, warning of potential military action against Moscow.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

The U.S. dollar continued to lose ground on Monday, deepening its losses from late last week, as disappointing employment data strengthened expectations of a near-term interest rate cut by the Federal Reserve.

By 04:20 ET (08:20 GMT), the U.S. Dollar Index—tracking the greenback against six major peers—declined 0.2% to 98.722, following Friday’s sharp 1% drop.

Poor Payroll Numbers Weigh on Dollar as Rate Cut Odds Rise

Friday’s employment report showed U.S. nonfarm payrolls grew by only 73,000 in July, significantly underwhelming forecasts. Compounding the weakness were sizable downward revisions to job gains in May and June. The unemployment rate edged higher to 4.2%, amplifying concerns over a labor market slowdown and prompting a shift in market sentiment toward monetary easing. Traders now see a roughly 90% chance of a rate cut in September.

Bond markets reacted swiftly, with the yield on the two-year U.S. Treasury falling to a three-month low of 3.6590% on Monday. Meanwhile, the 10-year yield hovered just above a one-month low at 4.2493%.

The White House also made headlines after President Donald Trump abruptly dismissed Bureau of Labor Statistics Commissioner Erika McEntarfer, accusing her—without offering evidence—of manipulating employment figures.

“Uncertainty about the quality of U.S. data is not a good look for U.S. asset markets and could add some more risk premium both into the dollar and Treasuries,” said analysts at ING in a note. “For Treasuries, this week sees $125bn in auctions of three, ten and thirty-year Treasury notes. Let’s see how those auctions go.”

Further adding to the dollar’s challenges was the unexpected resignation of Federal Reserve Governor Adriana Kugler. Her departure gives President Trump the opportunity to install a more dovish policymaker, potentially increasing the internal pressure on Fed Chair Jerome Powell.

“An earlier replacement for Kugler would likely add another dissenter to the Fed’s current stance of unchanged rates and turn up the internal pressure on Powell,” ING added.

Euro Outlook Brightens

In currency markets, the euro slipped 0.2% to 1.1563 against the dollar, consolidating after Friday’s strong rally.

“With an important low made near 1.1400, we suspect there will be plenty of buyers in the 1.1500/1520 area – should it make it that low. 1.1700 seems a reasonable target for the next couple of weeks,” said ING.

Eurozone sentiment also received a lift from Spain, where data from the Labour Ministry showed a 0.1% decline in jobless claims in July. The total number of unemployed fell to 2.40 million, marking the lowest figure since June 2008.

Elsewhere in Europe, the British pound dipped 0.1% to 1.3274, while USD/CHF advanced 0.6% to 0.8085. The Swiss franc remained under pressure after President Trump targeted Switzerland with steep tariffs as part of his broader trade overhaul.

“If those tariffs stick, this will add to the disinflationary forces in Switzerland, which are keeping CPI near 0% year-on-year,” noted ING.

Yen Retreats, China Optimism Lifts Yuan

The Japanese yen gave up some of its recent gains, with USD/JPY climbing 0.3% to 147.94. The currency had drawn strong haven inflows on Friday, setting it apart from its peers.

Meanwhile, the Australian dollar edged up 0.1% to 0.6482. The Chinese yuan gained ground as well, with USD/CNY falling 0.5% to 7.1763 after encouraging comments from U.S. Treasury Secretary Scott Bessent. On Friday, Bessent said he believed the U.S. was on the verge of a trade breakthrough with China and that he remained “optimistic” about the path forward.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

European stock indices advanced on Monday, kicking off the week with modest gains as investors appeared to take advantage of last week’s sharp selloff. The rebound comes amid ongoing global trade tensions and renewed expectations for interest rate cuts in the U.S.

By 07:05 GMT, Germany’s DAX had added 0.3%, France’s CAC 40 climbed 0.5%, and the UK’s FTSE 100 rose 0.2%. The uptick follows a difficult end to the previous week, when the pan-European Stoxx 600 posted its worst daily performance since April, dragged down by the U.S. administration’s latest round of global tariffs announced on August 1.

Traders Look Past Tariffs, Focus on Fed Easing

Despite lingering concerns over U.S. trade policy, particularly under the Trump administration, market participants appeared willing to “buy the dip” following Friday’s disappointing U.S. employment data. The weaker-than-expected nonfarm payrolls report has strengthened market conviction that the Federal Reserve will lower interest rates in the coming months.

Current futures pricing reflects expectations for around 60 basis points of rate cuts by year-end—nearly double the projections before Friday’s jobs release. There is now an 83% probability priced in for a rate cut as early as September.

Monday’s European economic calendar is light, leaving investors to focus on potential signals from U.S. factory orders data, due later in the day, as a gauge of how American businesses are handling new tariffs.

Meanwhile, political uncertainty continued in Washington. Over the weekend, President Donald Trump announced plans to name a new chief statistician, following the abrupt dismissal of Erike McEntarfer, the former head of the Bureau of Labor Statistics. Trump accused her of falsifying job data but has not provided evidence.

Earnings Roundup: Senior Delivers, PostNL Disappointed, UBS Pays Settlement

The Q2 earnings season has slowed, but several notable updates emerged Monday. Senior PLC (LSE:SNR) posted a 32% increase in pretax profit for the first half of fiscal 2025, supported by solid performance in both its Aerospace and Flexonics segments.

Dutch postal and logistics group PostNL (EU:PNL) reported a €24 million loss for the quarter, following a €40 million impairment tied to the government’s refusal to support its mail division. The news raises concerns over the company’s long-term strategy in a challenging market.

UBS (NYSE:UBS) confirmed it will pay $300 million to settle outstanding liabilities related to mis-sold mortgage-backed securities by Credit Suisse in the U.S.—part of the fallout from the bank’s 2023 acquisition.

Oil Prices Hold Firm Despite OPEC+ Output Increase

Crude oil prices were relatively stable in early trading, despite fresh supply pressures. OPEC and its allies, known collectively as OPEC+, announced a planned production boost of 547,000 barrels per day for September—bringing a full reversal of previous cuts forward.

As of 03:10 ET, Brent crude was down slightly at $69.80 per barrel, while WTI crude inched up 0.3% to $67.53. The supply increase, which aligns with market forecasts, reverses the bloc’s most significant production curbs, equivalent to roughly 2.4% of global demand.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

UK equities opened the week higher on Monday, with the FTSE 100 climbing 0.3% by 0749 GMT. The advance mirrored gains across major European indices, while the British pound edged down 0.05% to $1.32.

Germany’s DAX rose 0.8%, and France’s CAC 40 gained 0.9%, reflecting broader market optimism.

BP Surges on Landmark Brazilian Oil and Gas Discovery

Shares in BP PLC (LSE:BP.) gained ground after the company revealed its most significant oil and gas discovery in over two decades. The find is located in Brazil’s deepwater Santos basin, specifically in the pre-salt layer known for its rich hydrocarbon potential.

This discovery supports BP’s long-term production ambitions, with a goal to raise output to between 2.3 and 2.5 million barrels of oil equivalent per day by 2030.

Additionally, BP is set to unveil more details about its $5 billion cost-cutting strategy on Tuesday, according to a report by the Financial Times. The move follows mounting pressure from activist investor Elliott Management for deeper operational efficiencies.

Senior Delivers Strong Interim Results, Maintains Guidance

Engineering group Senior PLC (LSE:SNR) reported a 32% jump in pre-tax profit for the first half of fiscal 2025, bolstered by solid performance across both its Aerospace and Flexonics divisions. Group sales from continuing operations hit £371.2 million, marking a 5% rise on a constant currency basis and 3% on a reported basis compared to last year.

The company reaffirmed its full-year outlook and confirmed that the divestment of its Aerostructures unit is progressing as scheduled.

Lloyds Evaluates Motor Finance Exposure Post-Court Ruling

Lloyds Banking Group PLC (LSE:LLOY) said it will continue reviewing its provisions related to motor finance after the UK Supreme Court overturned key elements of a prior Court of Appeal judgment.

The high court concluded that motor dealers acting as credit brokers are not fiduciaries and that commissions paid in such arrangements do not amount to bribery. The ruling settles a long-disputed issue stemming from the Wrench, Johnson, and Hopcraft cases.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

BP (LSE:BP.) has revealed a significant new oil and gas find in the Santos Basin off Brazil’s coast, its largest discovery in the past 25 years. Situated in the deepwater pre-salt zone, the reservoir is expected to hold substantial resources, reinforcing the region’s status as a key area for energy exploration.

The company aims to boost its production capacity to between 2.3 and 2.5 million barrels of oil equivalent per day by 2030, capitalizing on this major discovery to support its long-term growth objectives.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Wizz Air (LSE:WIZZ) reported a 6.8% rise in passenger numbers for July, reaching 6.3 million travelers. However, the airline’s load factor fell by 1 percentage point to 92.8%.

To meet the second-quarter consensus forecast of 19.6 million passengers, Wizz Air will need passenger growth to accelerate to 10.5% in both August and September. Data from Cirium shows seat capacity increasing by 11% in August and 7.5% in September, indicating the airline is positioned to meet its quarterly targets, with a busy August anticipated.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Lloyds Banking Group (LSE:LLOY) has completed an initial review following the Supreme Court’s recent ruling concerning fiduciary duties and commission payments in motor finance agreements. The judgment confirmed that motor dealers acting as credit brokers do not owe fiduciary duties to customers, and that commission payments are not considered bribery. However, the Court identified unfairness in one particular case, resulting in a refund of commission plus interest.

While the decision offers some legal clarity, uncertainties remain, especially regarding the Financial Conduct Authority’s forthcoming consultation on a potential industry-wide redress scheme. Lloyds anticipates that any adjustments to its financial provisions related to the ruling will be immaterial.

The Group continues to demonstrate strong financial performance, supported by income growth, disciplined cost management, and robust capital generation as reflected in its recent half-year results. Strategic initiatives and share buybacks further reinforce Lloyds’ outlook, though ongoing challenges in profitability and cash flow remain areas to watch.

About Lloyds Banking Group

Lloyds Banking Group PLC is a leading UK financial services provider, offering a comprehensive range of banking, insurance, and wealth management products. Serving both individuals and businesses, the Group leverages an extensive branch network and advanced digital platforms to deliver broad financial solutions across the UK.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.