The FTSE 100 got off to a strong start as gold moved through $5,500 and oil ticked up amid mounting tensions between the US and Iran.
The mining sector did much of the heavy lifting for the index, buoyed by a positive production update from Glencore and the impact of precious metals strength on Fresnillo and Endeavour. BP and Shell were lifted by a stronger crude oil price.
Wall Street yesterday greeted the latest Federal Reserve decision with a shrug as interest rates were kept on hold – with much of the action coming after the market close as investors reacted to results from Tesla, Microsoft and Meta. Asian markets were more downbeat as the possibility of conflict in the Middle East was weighed up.
Lloyds
Banks should do well when interest rates are rising so it is noteworthy that Lloyds achieved double-digit profit growth for 2025 despite rates moving lower through the course of the year.
The performance is a vindication of the strategy adopted by CEO Charlie Nunn in 2022 to diversify the business and make it less reliant on the interest rate cycle. Growth in areas like insurance and wealth management are helping to achieve this goal and Lloyds’ lending is continuing to grow, helping to explain the better-than-expected performance. Returns are improving at pace and there is a sizeable increase in the dividend to cheer investors.
That these numbers were greeted with a desultory waving of a small plastic flag rather than the presentation of an ornate garland by the market reflects the exceptional showing for the shares in recent times.
Having delivered on the things it can control, Lloyds may now be hoping for some help from an improvement in the UK economic outlook. Nunn is also due to set out the next stage of the strategy at some point this year and this will be closely monitored by investors.
EasyJet
EasyJet may have chalked up some eye-catching losses in the final three months of 2025, but investors were more interested in the record bookings during January for the crucial summer season and the unchanged outlook.
Airlines are often in the red during the lower-demand winter period due to the significant fixed costs associated with running and maintaining a fleet of planes and their crew.
Losses were exacerbated in EasyJet’s most recent period thanks to investments in Italy, but the market is likely to be forgiving if they subsequently deliver revenue growth.
In highlighting the competitive environment, EasyJet offers a reminder that operating budget flights remains a cut-throat market.
EasyJet’s share price has not been without turbulence in the post-pandemic era, though the one big success story has been the company’s expansion into package holidays. This part of the business has made an increasing contribution to group revenue, profit and cash flow in recent times and is continuing to grow rapidly.
Meta / Microsoft
Dan Coatsworth, Head of Markets at AJ Bell, comments:
We’re in an AI spending frenzy and it’s only intensifying. Meta and Microsoft have both outlined significant outlays on AI infrastructure to ensure they’ve got the capacity to support both their own and clients’ AI needs.
They’re spending money today in the hope of making big money tomorrow, and investors are having to put a lot of faith in them achieving good returns.
Meta’s shares rallied in pre-market trading despite signalling it would spend nearly twice as much on AI infrastructure this year than last. Helping to get investors on side were comments that AI is already helping its staff to become more productive, and that revenue is flying. Meta is also investing to develop its own chips and AI coding tools which should bring down costs over time.
Meta is a rare example of company that quickly proved the benefits of AI, having last year extolled the virtues of the technology in improving engagement rates on its social media platforms. The more people watch its social media videos and reels, the more they are exposed to advertising which lines Meta’s pockets with silver and gold.
The big unknown for Meta is whether its decision to start charging users a small fee to have ad-free access to its social media platforms is commercially sound. If streaming platforms are anything to go by, a lot of people are happy to put up with adverts for a cheaper way to use a service, so Meta won’t see everyone go ad-free. For those who pay Meta for ad-free usage, will the company get less money through subscriptions than from advertising revenue? Meta might argue it’s about giving customers choice.
Microsoft didn’t get the hero’s welcome for its results. While revenue and earnings beat expectations, slowing cloud computing growth disappointed the market. Cloud computing is a key part of the company’s bread and butter, and investors want to see it singing from the rooftops. It’s a highly competitive market and a sensitive area every time Microsoft reports.
Cloud computing is closely tied to the AI story and failure to either meet or beat previous growth rates raises the risk in the market’s eye that some AI expenditure might be too high if demand is not also going through the roof.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
