Week ahead: UK banks and Oil as well as big tech dominate in a big week for results

US Nonfarm Payrolls (Apr) – 02/05 – Even as the US economy continues to show some signs of a slowdown, it’s not becoming apparent in the labour market at the moment. The latest weekly jobless claims numbers have remained steady at around circa 220k with continuing claims at 1.84m. The March payrolls report saw 228k new jobs which was a solid increase from a weaker February report, while the unemployment rate edged up to 4.2%, although that was mainly down the participation rate also edging higher to 62.5%. Even the private sector ADP report has shown few signs of a significant slowdown, although recent data has shown some evidence of a slowdown in hiring, as February ADP slowed to 84k, before picking up to 155k in March. With all the uncertainty prevailing right now it’s hard to discern anything other than caution seeping into the US economy, particularly amongst consumers, as well as business more generally. The real evidence is likely to come when all of the recent disruption in prices, as well as supply chains, with many firms forward buying a lot of inventory starts to unwind and then we’ll get a clearer idea of where the economy is. This uncertainty is one reason why the Federal Reserve has been understandably cautious in signalling further rate cuts. The loud noises being made by the US President about lowering rates aren’t helping either as the Fed will not want to be seen to be giving the impression it is caving to pressure from the US administration. Expectations are for 123k jobs for April, and unemployment to remain unchanged at 4.2%. While President Trump appears to have toned down his tone against Powell the pressure for rate cuts is unlikely to abate whatever the upcoming jobs report tells us about the labour market.                     

UK lending data/Mortgage approvals (Mar) – 01/05 – Levels of mortgage approvals have been remarkably resilient in the first part of this year which seems surprising given the concerns about the health of the UK economy as we enter into Q2, and some significant increases in the cost of living. Over the last few months, the number of approvals has averaged over 65k, the highest they’ve been since mid-2022. Some have suggested that the reasons for this have been down to the impending changes to stamp duty rules which increased the costs of buying a house quite significantly at the start of this month. That said, given the time it takes for a house sale to go through you would have thought that leaving it so late would leave little time to beat the April deadline. I guess we’ll only really know when we get the mortgage data for April and see whether we get a significant drop-off. We are already seeing evidence of a slowdown in house prices with prices coming back from their recent highs. Consumer credit data is also likely to be closely scrutinised for signs of a slowdown as well.                              

AstraZeneca Q1 25 –28/04 – One of the biggest companies in the FTSE100 AstraZeneca reports this week at a time when the pharmaceutical industry could find itself in the firing line as President Trump sets about his blitz on international trade policy. Earlier this month the US President announced tariffs on imported medicines and while they haven’t kicked in as yet due to the recent suspension there is a concern that any imposition would damage the likes of Glaxo and AstraZeneca quite significantly, with AstraZeneca shares slipping to one-year lows earlier this month. At their most recent earnings update AstraZeneca reported a 24% increase in Q4 revenue to $14.9bn, with full year revenues up 18% to $54.1bn. Core EPS increased 19% to $8.21. Oncology saw the biggest improvement as the Alexion acquisition continued to reap dividends, with revenues there rising 24%. Guidance for 2025 was also positive with total revenue expected to increase by high single digit percentage and core EPS expected to increase by a low double-digit percentage.                  

Associated British Foods H1 25 - 29/04 – When Primark owner ABF reported in January it was on the back of a modest rebound in pre-Christmas spending which saw Primark sales grow by 2% in Q1, despite weakness in the UK and Ireland. Sales in Spain, Portugal, France, Italy and the US helped offset weakness in the UK market, with those former markets all exhibiting positive growth potential. Across the whole business total revenue fell 2.2% to £6.7bn, with the biggest declines in its sugar and agriculture businesses, of 6% and 5.1%. Since May last year the shares have slumped from highs of over £27 to as low as £18.20 in early February. We’ve seen a modest rebound since then but the retail outlook continues to look a difficult one and that’s before we even consider the recent weakness we’ve seen in its other business areas. As far as the outlook is concerned, Primark is targeting low-single digit sales growth in 2025. ABF said this would be driven by their store rollout programme in growth markets in Europe and the US, which is on track to contribute around 4% to total Primark sales growth, offset by the weaker like-for-like sales in the UK and Ireland during the autumn. This is likely to be key in the context of further gains. ABF may well be able to absorb any weakness in its UK market due to the improvements, as well as expansion in its other European markets, as well as the US.             

BP and Shell Q1 25 – 29/04 – 02/05 – This week will be one of contrasting fortunes for the UK’s 2 biggest oil companies. 2025 hasn’t seen a particularly good start for BP or Shell for that matter, not altogether surprising when you consider how oil prices have performed. Nonetheless the lacklustre performance in the Shell share price can be more easily explained given how much it has outperformed the BP share price in recent years. In the last 2 years while the Shell share price has traded more or less sideways, BP has seen its share price lose more than 20% to trade at 3-year lows. The decline from those 570p peaks has been due to a variety of factors, not least management's refusal to pull back from its transition to renewables. This was something Shell recognised early in 2022 when incoming CEO Wael Sarwan said that the oil company would be much more focussed on creating “profitable business models that can be scaled at pace to truly impact the decarbonisation of the global energy system, and invest in the models that work – those with the highest returns that play to our strengths." BP management's failure to get the memo on this has seen the likes of activist investor Elliott Investment Management build up a sizable stake in the UK oil major in an attempt to force management into a U-turn and return the company to a modicum of profitability. As things stand, we’ve already heard that BP chairman Helge Lund will be stepping down next year, however any changes may not end there. There are still many questions about the future of current CEO Murray Auchinloss who previously seemed determined to drive the BP share price even lower with his reluctance to act on shareholder demands to move away quicker from its previous net zero targets. Now that this finally appears to be happening the question is what took them so long. BP’s problem has been that it wants to appear to be all things to all men when it comes to the energy transition when the reality is that the profits simply aren’t there. Some shareholders have expressed disquiet about the recent announcement to pivot back towards oil and gas, with Legal and General publicly expressing its concern earlier this month. While there does appear to be divergent views on this contentious topic, even L&G must acknowledge that recent share price performance has been woeful and a radical reset is needed. This poor performance is no better illustrated than in the profit numbers for its gas and low carbon energy division last year, compared to 2023. Profits for this division in 2024 fell from $14.08bn to $3.57bn, and at the end of last year the declines in the share price prompted speculation that continued underperformance could signal takeover interest, as we headed into 2025. Also slipping to a loss was customers and products which last $2.4bn in Q4. The Q4 and full year numbers served to underline the underperformance after the oil major slipped to a $1.95bn loss, dragging annual profits down to $750m a sharp fall from last year’s $16.18bn. As part of the reset towards oil and gas, announced at the recent investor day, CEO Auchincloss announced that the company is calling time on wind by selling its US onshore wind portfolio in Lightsource, as well as much of its global offshore wind business through a new 50/50 JV with Japan’s JERA. There has been chatter that BP might find itself a bid target, however given the government has the ability to block any overseas bid for BP on national security grounds that doesn’t mean that a tie up with Shell hasn’t been mooted in some parts. There is so much wrong with this concept aside from the fact that Shell shareholders are unlikely to be that keen. Furthermore, the size of any new company would open up a smorgasbord of antitrust issues and would likely take years. It’s more likely that in the absence of a rebound in the share price current management may well find themselves shepherded towards the exit door and a new broom brought in to speed up the process. Ultimately BP will need to sort its own mess out.

Travis Perkins Q1 – Having seen their shares briefly plunge to a 16-year low as they belatedly released their full year results, we’ve seen a modest recovery since then, albeit of the dead cat variety. Let’s recap briefly on the numbers. Revenues slipped to £4.6bn, operating profits fell 99% to £2m from £161m the previous year, as the company fell to a loss after tax of £77m. The company recorded £139m in respect of impairments across branches and the firm's Staircraft business. The builders merchant also posted a cautious outlook so we’ll get to see how that pans out this week. Why Travis Perkins is suffering more than its peers is hard to tell, although if some of the comments on our video shorts on TikTok are any guide it seems the main gripe is high prices which seems ironic when you consider management's chief gripe was price deflation for their disappointing results.             

UK Banks Q1 25 – All week – It’s been a choppy April for the UK banking sector with the sharp falls seen at the start of the month slowly being reversed as it becomes apparent that for all the risks around US tariffs, their effects on the UK economy may well prove to be limited. As providers of services, banks are also unlikely to be as affected as suppliers of goods, nonetheless that doesn’t mean that their customers won’t suffer a significant impact, which could place customer finances under significant strain in the coming months. With reporting season now in full swing investors in the UK will be able to get a good look under the bonnet of the UK economy, as the high street banks get set to publish their Q1 trading updates, against a backdrop of a UK economy that may about to struggle further despite recent resilience in the latest GDP numbers. Next week we will be getting the Q1 trading updates for Barclays, NatWest, HSBC and Lloyds and where we’ve seen the shares of all of them rebound strongly after falling sharply at the start of the month, and where by and large we’ve seen a good start to the year share price wise. So far year to date Lloyds has led the way with gains in excess of 30%, followed by NatWest Group whose shares are up over 15%, followed by Barclays and HSBC.   

Meta Platforms Q1 25 – 30/04 – At its last set of numbers Facebook owner Meta saw another strong quarter with the family of apps segment which includes Facebook, Instagram, WhatsApp and Messenger generated $47.3bn of revenue, giving it an income of $28.3bn for Q4. Total revenue for Q4 was slightly higher at $48.4bn when Reality Labs revenue was added into the mix, an increase of 21%, while the income overall was reduced due to a almost $5bn loss in that same Reality Labs division reducing total income for the quarter to $23.36bn, still a significant increase from the same quarter a year before with Reality Labs losses seeing a sizeable reduction from $17.7bn.  For Q1 Meta said it expected revenues to be in the range of $39.5-$41.8bn, an increase of between 8-15%, although it declined to offer a full outlook for the full year other than saying that total expenses are expected to rise to between $114bn and $119bn, driven by new hiring as the business builds up its infrastructure resilience and improving profitability in Reality Labs. Full year capex is estimated to be between $60bn and $65bn, as like its peers, Meta pushes more investment into AI. The CFO did warn on an active regulatory outlook which was borne out by this month’s announcement from the EU it was fining the company €200m for data collection issues. Profits are expected to come in at $5.30 a share.   

Microsoft Q3 25 – 30/04 – The tech earnings story continues this week in the wake of last week’s Q1 numbers from Google owner Alphabet which beat expectations. As with the rest of the sector we’ve seen sharp falls in the Microsoft share price since its Q2 numbers at the end of January, despite the fact they were very strong. Revenues rose by 12% to $69.6bn with services the biggest driver as the Microsoft 365 product suite helped to deliver a 13% increase to $29.4bn. Revenue in Intelligent Cloud rose 19% to $25.5bn, driven by a 21% increase in Azure, and other cloud services revenue. Personal Computing saw revenue of $14.7bn, broadly flat and which includes Windows and Xbox sales. LinkedIn revenue rose 9%. The AI business saw revenue of $13bn, an increase of 175% on an annual basis. Q3 guidance was a little on the light side which perhaps explains some of the share price weakness, but not all of it, with revenue expected to be between $67.7bn to $68.7bn, with Azure expected to see revenue growth of 32%. Profits are expected to be $3.22 a share.   

Apple Q2 25 – 01/05 – Like a lot of the Magnificent 7 tech stocks the Apple share price has taken a hit since the company posted its last set of earnings numbers back in January. Apple’s first quarter is always a key bellwether as it covers the main holiday periods in the US, namely Thanksgiving and the Christmas holidays. This is because it offers a major insight into the type of demand there is, not only for their high-end products, but also for services in general. Services have grown consistently over the years to be a much more important contributor to Apple’s revenue profile over the years, in so much it now adds up to 25% of sales.  In any case Apple managed to deliver across the board with record revenue in Q1 of $124.3bn, a rise of 4%, and EPS of $2.40c a share with a dividend of $0.25c a share. This was broken down into iPhone sales of $69.14bn, a modest decline from $69.7bn the previous year, Mac sales $8.99bn, an increase from $7.78bn the previous year. iPad sales also increased to $8.09bn from $7.02bn, while Wearables slowed to $11.75bn from $11.95bn. The big winner was services which rose sharply to $26.34bn from $23.12bn. The key takeaways before President Trump imposed his various tariffs was that sales in Greater China slowed by over $2bn, to $18.5bn, while sales everywhere else held up well, with Europe seeing a decent gain to $33.86bn from $30.4bn. With Apple likely to find itself caught up in Trump’s dealings with China, there is a hope that Apple’s move towards the Indian market with more iPhone production as well as sales being done there, will help offset any further weakness in its China markets. Profits are forecast to be in the region of $1.61 a share.

Amazon Q1 25 – 01/05 – Like its peers Amazon’s share price peaked just prior to the release of its Q4 numbers at the end of January, with another bumper quarter for the online retailer, and the US business continuing to drive the bulk of sales. Total net sales came in at $187.8bn, a sizable increase on Q4 last year which saw $169.96bn. Full year sales rose to $637.96bn an increase of 11%. Net income rose to $20bn, almost double the amount in Q4 last year. AWS continued to grow at a consistent double-digit rate, with quarterly net sales rising to $28.78bn, pushing its operating income over $10bn to $10.6bn. On an annual basis AWS operating income saw an even bigger jump, rising to $39.8bn, up from $24.6bn a year ago. EPS profits rose 86% to $1.86 a share. The Cloud business, as has been the case across the sector, has been a key growth area for Amazon, as well as Google and Microsoft. For Q1 2025 Amazon said it expects net sales of between $151bn and $155.5bn, while profits are forecast to be in the region of $1.35 a share. Operating income expected to be between $14bn and $18bn with all eyes set to be on how the company sees the outlook with respect to Q2 against the backdrop of a US economy that is showing signs of slowing.