The FTSE 100 rallied on Monday as investors piled back into Lloyds shares following a favourable court ruling, and US futures ticked higher after a job report-induced sell-off on Friday.
August has brought severe bouts of volatility in recent years, so investors are likely to be encouraged by the 0.4% rally in London’s leading index on Monday, especially after such a poor US jobs report last week.
“The FTSE 100 managed a cautious recovery on Monday morning after the tariff-related sell-off at the end of last week,” said AJ Bell investment director Russ Mould.
“Concern about the ongoing ructions in global trade was compounded by the Trump administration’s decision to fire the head of the Bureau of Labor Statistics off the back of weak jobs numbers – raising questions about the reliability of US economic data and about a potential slowdown in the world’s largest economy.
“Despite this, US futures were pointing to gains when Wall Street resumes trading later. Whether this holds will depend on the latest news from the Trump administration, the latest developments in the economy, with ISM Services PMI data on Tuesday due to give a signal here, and corporate earnings.”
Lloyds
Lloyds shares were firmly at the top of the FTSE 100 leaderboard on Monday as investors cheered a Supreme Court ruling that means Lloyds will avoid the worst-case scenario for car finance payouts.
The Lloyds share price rose more than 6% after the court ruled that the payment of commissions involving credit brokers did not constitute a bribe and effectively reduced the potential redress payouts by billions of pounds.
“Friday’s Supreme Court ruling on car finance commissions is a win for UK lenders, bringing some much-needed legal certainty,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“But it’s not a home run as the FCA announced plans to explore a compensation scheme that could cost the industry £9–18bn. Lloyds was one of the most exposed names, and investors should be relatively pleased with this outcome – it’s broadly aligned with existing expectations, helping to alleviate fears that the final bill could be significantly higher.”
FTSE 250 Close Brothers, also highly exposed to the motor finance ruling, surged 17% on Monday.
Rolls-Royce was again among the FTSE 100 top risers as the engineering firm’s ascent resumed and shares closed in on record highs.
BP shares rose 1% after announcing an oil and gas discovery at the Bumerangue prospect in offshore Brazil.