Lloyds first half profit grows, Sky ends year on high

London open

The FTSE 100 is expected to open 5.2 points lower on Thursday, after closing 0.39% higher at 6,750.43 on Wednesday.

Stocks to watch

Lloyds Banking Group made a slightly bigger pre-tax profit in the first half of the year and has begun the process of cutting 3,000 jobs, closing 200 branches and selling almost third of other properties to cut costs. Reaffirming its full year guidance for net interest margin and cost:income ratio, the bank posted an underlying pretax profit £4.2bn, ahead of consensus estimates of £4.06bn, and declared an interim dividend of 0.85p per share, up 13%.

Subscription broadcaster Sky posted results for the year to 30 June on Thursday morning, reporting a 7% increase in revenue to £11.965bn, with adjusted operating profit up 12% to £1.558bn. The firm said adjusted earnings per share rose 13% during the period to 63.1p, and declared its 12th consecutive year of dividend growth to 33.5p. During the year, Sky gained 808,000 customers and sold 3.3 million new products. On a statutory basis, revenue rose 20%, operating profit improved 1% to £977m and earnings per share were 39p.

Adjusted interim operating profits at energy provider Centrica fell 12% to £853m reflecting extreme warm weather in North America and the impact of low commodity prices on exploration and production and central power generation, partially offset by cost efficiency. Revenue fell 13% to £13.38bn and adjusted earnings 14% to £507m which in turn led to adjusted basic earnings per share slumping 17% to 9.8p. The interim dividend was increased to 3.6p from 3.57p.

Newspaper round-up

At least one airport in the south of England is expanding. London City has been given the go-ahead to increase capacity by nearly 40 per cent as part of a £344 million plan. The scheme involves an extended terminal, a new aircraft taxiway and extra berths as well as better public transport links. - The Times

Royal Bank of Scotland is attempting to settle a multibillion-pound legal claim brought by shareholders who say they were misled into supporting the bank’s £12 billion rights issue in 2008. It is in talks with representatives of institutions and thousands of private investors who claim that its true state was hidden from them when they bought shares to stabilise the bank’s finances during the financial crisis. - The Times

The Guardian’s losses reached more than £180m last year as the newspaper publisher’s digital growth went into reverse and the print market grew tougher. A difficult year for the left-leaning title ended in a pre-tax loss of £173m. After tax the Guardian plunged £180.3m into the red - almost 18 times its losses in the prior year. The largest single contributor to the loss was a write-down on its stake in Ascential, the business publisher and events company it invested in alongside the private equity giant Apax Partners. - Telegraph

Theresa May is under growing pressure from Liam Fox, the trade secretary, to pull out of the EU customs union, a move required to facilitate post-Brexit bilateral trade deals but which would impose costs on exporters and could strain Anglo-Irish relations. The issue is looming as a battleground in discussions over whether the UK will pursue a “hard” or “soft” Brexit. It will have to be resolved before London triggers Article 50, the starting gun for withdrawal negotiations with the EU. - Financial Times

US close

US stocks had a fruitless day on Wednesday despite strong gains for Apple, as the Federal Reserve delivered a more hawkish statement than many in the market had expected and oil prices were slicked back down.

The Dow Jones failed to hold onto early and late gains to finish just shy of parity at 18,464.23, a fall of just a handful of points on the day; the S&P swung from near all-time highs at the open to end down 0.12% at 2,166.58; the Nasdaq closed at its highest point in 2016, up 0.58% at 5,139.81.

Crude oil prices collapsed again late in the session, with West Texas Intermediate sliding 2.4% to $41.90 a barrel and Brent crude down 3.3% at $43.38.

In early trading, sentiment had been boosted by Japanese Prime Minister Shinzo Abe hinting that he wanted to unveil a large stimulus package ahead of the weekend. He said on the government would deliver a stimulus package of Y28tn ($265bn), half of which would comprise fiscal measures. The news comes ahead of the Bank of Japan’s policy announcement on Friday.

But later, US Fed rate setters stood pat but said they felt short-term risks to the economic outlook had diminished and that the recovery of the job market had regained momentum, suggesting they were leaving the door open to raise rates possibly as soon as September's meeting.