Royal Bank of Scotland and International Consolidated Airlines

“Any suggestion UK stocks might end the week on a more positive note has been swatted aside after the third quarter sales performance of Amazon and Google’s parent company Alphabet disappointed after the market close in the US. “Given the technology sector helped lead US indices to fresh highs in 2018 and is so dominant, its performance in the current earning season was always likely to be pivotal to investor sentiment,” says AJ Bell Investment Director Russ Mould.

Royal Bank of Scotland

“This third quarter update from state-owned lender Royal Bank of Scotland fails to match the well-received statements served up by peers Barclays and Lloyds Banking earlier this week.

“Yes, profit is higher in the third quarter, but its margins are under pressure thanks to a highly competitive mortgage market.

“You would have expected rates for mortgage lending to have followed UK interest rates higher but in fact the reverse has been true.

“As the likes of RBS have retreated from riskier areas of banking, mortgages have become an increasingly attractive way of making money and this, combined with the emergence of several challenger banks, has helped to keep a lid on mortgage rates.

“Unlike Barclays or Lloyds who made no further provisions for PPI in the quarter, RBS has topped up its PPI provision by £200m and also set aside £100m for Brexit, something the other banks have also not done.”

International Consolidated Airlines

“Given the numerous headwinds facing British Airways owner International Consolidated Airlines today’s third quarter update from the company has to be considered a minor triumph.

“Profit was strong and just ahead of consensus forecasts as the company kept tight control on non-fuel costs and was able to push through higher fares.

“The company has also hedged its exposure to fuel prices and this combination of factors should enable it to join a select grouping of airlines which will grow profit in 2018. A feat achieved despite the significant increase in crude oil prices that is pushing up the price of jet fuel.

“The prospect of further failures in the airlines space, with other operators in a much more precarious position, could help support IAG’s competitive position too.

“And there may also be some relief among shareholders that an investigation into the recent cyber security attack on British Airways customer data has not yet turned up any evidence of fraud.”

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