Spreadex Market Update

FTSE falls as bloody RBS and IAG counter Pearson rise



After eventually easing some of yesterday’s hefty losses before the session’s close, the European indices are struggling to now follow in the footsteps of a rebounding Dow Jones.

The FTSE fell 0.3% after the bell, taking it back below the 7250 mark it has spent the struggling to break past, as the pound sat flat at $1.395 against the dollar – a huge improvement on Thursday’s lows – and up 0.2% against the euro. Once again the index didn’t receive much help from its reporting companies. While Pearson rose more than 5%, the former FT-owner swinging from a £2.5 billion loss to a £421 million full year pre-tax profit, RBS and IAG weren’t so lucky.

The 71% tax-payer owned bank soon fell 4.5% as the session got underway, even after reporting its first annual profit for a decade. It seems that investors were put off but the lack of clarity surrounding RBS’ settlement with the US Department of Justice – which was meant to be sorted last year – with the bank still in line for a potentially colossal fine. In regards to that, RBS set aside another £492 million, taking its total US litigation kitty to £3.2 billion.

As for International Consolidated Airlines Group, the British Airways-owner ended up dropping 3.5% as its 19% rise in operating profit still fell short of analysts’ estimates. However, there was still plenty to enjoy in IAG’s update, including an upgrade to its 2018 earnings forecasts, a 15% increase to its full year dividend to 27 cents per share, and the promise of a €500 million share buyback at some point in 2018.

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