Barclays hikes net interest guidance, Next raises full-year forecast

London open

The FTSE 100 is expected to open 30 points higher on Thursday, having closed up 1.13% on Wednesday at 8,367.98.

Stocks to watch

Barclays reported a return on tangible equity (RoTE) of 11.1% for the first half on Thursday, alongside announcing £1.2bn in capital distributions to shareholders. The FTSE 100 bank also increased its 2024 net interest income guidance to around £11bn, driven by higher interest rates and improved deposit dynamics. Despite a slight year-on-year decline in group income and an increase in operating expenses, Barclays maintained its key financial targets, including a CET1 ratio of 13.6% and a cost-to-income ratio of around 63%.

Next reported a 3.2% increase in full-price sales for the second quarter, surpassing expectations by £42m, despite forecasting a slight decline. For the first half of the year, full-price sales rose by 4.4%, leading the company to raise its full-year profit guidance by £20m to £980m, a 6.7% increase from the previous year. The high-street retailer said the profit boost was driven by higher sales and £9m in cost savings, primarily in logistics.

Newspaper round-up

Meta’s shares rose in after-hours trading on Wednesday off the back of a strong earnings report that comes as the company is spending heavily on AI tools. The company’s stock price grew around 5% following the report, which revealed the company outperformed analysts’ expectations for its second quarter. Meta, which owns Facebook, Instagram and WhatsApp, reported $39.07bn in revenue and $5.16 earnings per share. Both results outpaced market predictions of around $38bn in revenue and $4.7 per share, while the company also reported $8.47bn in capital expenditures – lower than analysts expected. – Guardian

Two of the largest City firms have joined forces to invest as much as £20bn of pension money in fast-growing UK businesses such as green energy, after government reforms designed to increase returns for savers and the British economy. Phoenix Group, the country’s largest savings and retirement business, and Schroders, the investment manager, announced the launch of a joint venture to plough pensions money into high-growth companies which are not listed on the stock market. – Guardian

Asda chief Mohsin Issa has announced an emergency £30m cash injection amid an alarming sales slump at the troubled supermarket chain. The investment package, which will be used to boost staffing hours and improve customer service levels, will be implemented before the end of the year. It comes amid growing concern over Asda’s dwindling market share, as it is the only major supermarket losing customers. – Telegraph

A senior member of the Barclay family, which owns The Telegraph, has struck a confidential settlement with a leading private bank to avoid the threat of bankruptcy. According to court filings, Investec has dropped a legal claim against Alistair Barclay after months of wrangling over almost £1m in unpaid debts. The settlement was submitted to the High Court in late July, two days before Mr Barclay was expected to appear before a judge. – Telegraph

Two former directors of Chill Brands Group have been accused of “blatant fraud” and embezzlement against the London-listed vaping company, and of allegedly misusing funds for personal expenses and using a company email account to “engage with an X-rated business for personal purposes”. Chill Brands has been locked in an extraordinary dispute and power struggle with Antonio Russo, its former chief commercial officer, and Trevor Taylor, its former chief operating officer, and has now begun legal action in the United States in an attempt to regain control of its chill.com domain and some trademarks. – The Times

US close

Hawkish comments from the head of the Federal Reserve ignited US stocks on Wednesday with hopes rising for an interest-rate cut at the central bank's next meeting in September.

The S&P 500 jumped 1.6% to 5,522.30, while the Nasdaq surged 2.6% to 17,599.40.

The Dow, however, only rose 0.2% to 40,842.79 with the index now just inches away from its all-time closing high of 41,198,08 reached on 17 July.

The Fed's two-day policy meeting concluded on Wednesday with no change in policy, as was widely anticipated, but chair Jerome Powell indicated that the central bank would be prepared to loosen monetary policy at its next meeting if price pressures continue to ease.

On the macro front, US mortgage applications fell 3.9% in the fourth week of July, according to the Mortgage Bankers Association, extending the prior week's 2.2% drop to record the steepest weekly decline in almost two months.

Applications to purchase a home fell by 1.5% for a third weekly decline in a row, while those to refinance a mortgage tanked by 7.2% week-on-week.