Rolls-Royce hikes guidance, Lloyds Bank reports another surge in earnings

Stocks to watch

Rolls-Royce reported a significantly improved first-half financially in an update on Wednesday, surpassing consensus expectations. The FTSE 100 company upgraded its guidance for the full year, and now expected higher underlying operating profit and free cash flow. It put the positive momentum down to continued end-market growth, commercial optimisation, and cost efficiencies from its transformation programme, helping mitigate the impact of inflation and supply chain pressures.

Lloyds Bank on Wednesday reported another surge in earnings as it benefited from high interest rates, with half-year profits up 23% to £3.8bn. The bank said underlying net interest income rose14% to £7bn, although customer deposits of £469.8bn were £5.5bn lower.

Newspaper round-up

Almost £200bn of tax reliefs handed to businesses and individuals each year should come under greater government scrutiny to prevent fraud and abuse, according to an all-party group of MPs. The Treasury committee said in a report published on Wednesday that “a systematic review” into more than 1,000 tax reliefs was needed after MPs found HM Revenue and Customs did not have the resources to monitor how tax breaks and deductions were used. – Guardian

Taxpayers face a bill for an extra £50bn to cover losses on the Bank of England’s money printing, after stubborn inflation triggered frenzied bets on higher interest rates. The Bank’s latest estimate of losses it will suffer over the next decade on government bonds amassed during the pandemic and financial crisis has ballooned by around £50bn to £270bn in just three months. – Telegraph

Car industry executives have attacked mixed signals from ministers over the planned 2030 ban on petrol cars, over fears they will undermine investment in electric vehicles. Rishi Sunak this week appeared ready to change course, emphasising the need for a “proportionate and pragmatic” approach to net zero in response to questions. Then on Tuesday, Michael Gove said the ban, made law by Boris Johnson in 2020, was “immovable”. – Telegraph

Employers are feeling more confident about their hiring prospects and the state of the economy, in further signs that the labour market is still resisting the pressure of rising interest rates. A closely watched survey of employers in the public and private sector, carried out by the Recruitment and Employment Confederation (REC), found that sentiment improved between April and June, even as borrowing costs surged and inflation persisted at high levels. – The Times

JPMorgan Chase allegedly repaid Jes Staley, its former executive, for the cost of journeys he took to meet the paedophile Jeffrey Epstein, according to claims made in court filings in the United States. Staley, a former top executive at JPMorgan who later ran Barclays, is accused of witnessing and taking part in Epstein’s sex trafficking crimes.- The Times

US close

Wall Street enjoyed a positive close on Tuesday, buoyed by investor anticipation for the Federal Reserve's two-day policy meeting and a strong earnings season.

At the close, the Dow Jones Industrial Average made modest gains of 0.08%, closing at 35,438.07 points, while the broader S&P 500 index rose 0.28% to settle at 4,567.46.

The tech-heavy Nasdaq Composite led the pack, climbing 0.61% to end the day at 14,144.56.

In currency markets, the dollar was last up 0.06% on sterling to trade at 77.55p, while it climbed 0.03% to 90.48 euro cents

The greenback also saw a slight increase of 0.02% against the yen, changing hands at JPY 140.93.