Stocks rebound from Friday wipeout, BP earnings

Global stocks rebounded on Monday, recovering from sharp losses at the end of last week. A rally in bank shares, notably LLoyds, boosted the FTSE 100. This morning BP delivered a better-than-expected profit for the second quarter and lifted its dividend. Markets are also preparing for key earnings updates from major companies, including Caterpillar and Pfizer.

Equities

The FTSE 100 closed 0.7% higher on Monday, recovering from its steepest decline in nearly four months on Friday.

UK bank shares were among the strongest performers after the Supreme Court overturned a previous ruling on motor finance commissions, reducing the risk of a costly redress scheme. Lloyds Banking Group rose 9% to its highest level in a decade, Close Brothers surged 23.5%, and Barclays gained 1.6%.

BP advanced 1.8% on Monday following confirmation of its largest oil and gas discovery in 25 years in Brazil’s Santos basin. This morning (Tuesday) BP beat second quarter profit estimates. BP posted an underlying replacement cost profit of $2.35 billion for the second quarter, comfortably ahead of the $1.81 billion expected by analysts. The oil giant plans to raise its quarterly dividend by 4 per cent to 8.32 cents a share and also announced a new $750m share buyback programme.

Rolls-Royce added 2.3%, supported by strength in aerospace and defence stocks. Auction Technology Group, however, tumbled 21.7% on the FTSE 250 after lowering its annual profit margin forecast, while Senior slipped 3.5% despite reporting a 10% rise in first-half adjusted operating profit.

In the United States, all three major stock indices posted their biggest daily percentage gains since late May on Monday. The Dow Jones closed 1.34% higher at 44,173.64, the S&P 500 rose 1.47% to 6,329.94, and the Nasdaq gained 1.95% to finish at 21,053.58. The rebound followed Friday’s selloff triggered by weaker-than-expected July jobs data and downward revisions for May and June.

Tesla shares rose 2.2% on Monday after the electric vehicle manufacturer awarded CEO Elon Musk 96 million shares valued at approximately $29 billion. Spotify climbed 5% after announcing a September price increase for its premium individual subscription in selected markets. Conversely, Berkshire Hathaway’s Class A shares fell 2.7% after the company disclosed a $3.8 billion write-down alongside a dip in quarterly operating profit.

Political developments added to the backdrop, with President Donald Trump announcing plans to raise tariffs on Indian goods due to its Russian oil purchases, while also facing scrutiny over the dismissal of the Bureau of Labor Statistics Commissioner and the unexpected resignation of Federal Reserve Governor Adriana Kugler.

Forex & Commodities

The US dollar edged higher on Monday, stabilising after Friday’s sharp decline triggered by weaker-than-expected jobs data, a major downward revision to previous payroll figures, and President Trump’s firing of the Bureau of Labor Statistics chief. The dollar rose against the euro to $1.1568 and gained against the yen to 146.945. It also moved up to 0.8081 against the Swiss franc, after the White House included Switzerland among the countries hit with new tariffs. Sterling was broadly unchanged at $1.3275.

Expectations for a US interest rate cut in September strengthened, with markets now pricing in an 84% chance of a quarter-point reduction, according to CME’s FedWatch. Traders are also factoring in the likelihood of a second cut by year-end and placing around 40% odds on a third. The two-year Treasury yield dropped to a three-month low of 3.659%, while the 10-year yield hovered near 4.225%.

Gold prices rose for a third consecutive session on Monday. Spot gold was last up 0.3% at $3,372 per ounce, supported by increased bets on Fed easing and inflation concerns. Silver rose to $37.35, platinum reached $1,332, while palladium slipped to $1,188.

Oil prices fell to one-week lows after OPEC+ confirmed it would raise output by 547,000 barrels per day in September. Brent crude settled at $68.76 a barrel and WTI at $66.29. The pullback followed weak US fuel demand data and rising domestic production. Markets are now watching for further potential supply increases at the next OPEC+ meeting in September.