First quarter profits more than double at Barclays, RBS breaks into the black

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The FTSE 100 is expected to open 12 points higher on Friday, after closing down 0.71% at 7,237.17 on Thursday.

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First quarter pre-tax profits at Barclays more than doubled to £1.68bn from £793m, with increased income and a reduction in operating expenses delivering an improved cost: income ratio of 62% compared with 76% in 2016. Barclays said the group performance reflected strong core results, where pre-tax profits increased 20% to £1.92bn, and a materially reduced drag from non-core operations, which reported a loss before tax of £241m against £815m for the first quarter of 2016.

Old Mutual issued a slew of announcements on Friday, with one confirming that its had agreed to sell its 26% stake in Kotak Mahindra Old Mutual Life Insurance to its joint venture partner Kohak Mahindra Bank, for £156m equivalent. The FTSE 100 group also announced that the board of Old Mutual Wealth had appointed Tim Tookey as its chief financial officer, and that both net client cash flow and funds under management were ahead in the first quarter, by 59% and 6% respectively.

Royal Bank of Scotland broke into the black in the first quarter of 2017, the first quarterly profit since 2015 as total income and margins both improved. The taxpayer-owned bank swung to a net profit of £259m in the first three months of 2017, up from a £968m loss a year ago and the £4.4bn loss in the fourth quarter of last year.

Newspaper round-up

Rising inflation is taking its toll on British households, knocking consumer confidence to its lowest level since the aftermath of last summer’s Brexit vote. Pollsters YouGov said worries about job security and living costs pushed its monthly measure of consumer mood down a further 1.5 points to 108 in April, the weakest reading since last July. - Guardian

Theresa May’s plan to cap gas and electricity bills could put billions of investment in the UK at risk by creating huge uncertainty over government intentions, according to the body representing the big six energy suppliers. In one of the strongest warnings yet about the impact of the cap on standard variable tariffs pledged by the Conservatives, Energy UK protested against “ill-considered” political intervention. - Guardian

Serious doubts have been raised by MPs over HM Revenue & Customs’ hopes to save more than £500m by condensing its sprawling office estate into just a handful of giant hubs. The powerful Public Accounts Committee has questioned whether the 10-year scheme to reduce HMRC’s 170 offices to 13 regional bases in city centres, along with four specialist centres and a London headquarters will deliver the expected economies. - Telegraph

Britain is the number one destination in Europe for foreign direct investment, according to figures that revealed a surge in inflows to levels not seen since before the financial crisis. In a vote of confidence in Brexit Britain, UK FDI inflows soared to $253.7bn (£197bn) in 2016, up from £33bn the previous year, according to the Organisation for Economic Co-operation and Development (OECD). - Telegraph

Barclays has been dealt another blow over the future of its embattled chief executive after a corporate governance firm advised shareholders not to back his re-election to the board. Institutional Shareholder Services, whose clients include many British investors, said that because Jes Staley was under regulatory investigation for breaking rules to protect whistleblowers, investors should abstain from the vote at the bank’s annual shareholder meeting on May 10. – The Times

An advertiser boycott of YouTube in the wake of an extremist video scandal appears to have done little to dent the fortunes of its owner, Google. Soaring advertising sales at Google helped Alphabet, its parent company, beat Wall Street expectations with its financial results last night, sending shares higher in after-hours trading. – The Times

US close

Wall Street bounced back quickly but modestly on Thursday as the peak day of the earnings season was rather mixed, with investors still getting over their disappointment over White House tax cut plans the previous day.

News that the White House was not going to pursue an exit from NAFTA, opting instead for a renegotiation, provided some relief.

By the closing dong of the bell, with the dollar index inching up, the Dow Jones Industrials Average had picked up just over six points to end at 20,981.33, alongside gains of almost 24 points for the Nasdaq Composite to 6,048.94 and a rise of just 1.3 for the S&P 500 to 2,388.77.

Intel and Microsoft led the Dow higher during the session but both disappointed as they reported their numbers after-hours, with Microsoft dropping in after-hours trade as revenues missed forecast, while Intel slipped on an earnings miss.

More impressive results in the tech world arrived from Google's parent company Alphabet where forecast-beating earnings impressed, while Amazon's sales and earnings both beat forecasts to send the stock to record levels.

The day before, stocks had edged lower as investors were left disappointed by the lack of specifics in President Donald Trump's tax reform announcement. As widely expected, the announcement included plans to cut corporate tax to 15% from 35% and reduce the top individual tax rate to 35% from 39.6%.

Yet the US administration's proposals did not include specifics on the costing of the cuts.