Daily market update: Supreme Court motor finance ruling, Clarkson, BP

“The FTSE 100 managed a cautious recovery on Monday morning after the tariff-related sell-off at the end of last week,” says 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.

“One of the top performers on the US market – technology firm Palantir – reports after the market close on Monday. The company has won significant contracts with US government agencies and shareholders will be hoping it can sustain its recent momentum.”

Lloyds/Barclays/Close Brothers

“Lloyds has confirmed what everyone will have guessed based on last week’s Supreme Court ruling on motor finance mis-selling. The worst-case scenario, like a particularly ugly pothole, has been swerved.

“This wasn’t a complete win for the industry, with lenders still potentially on the hook if the relationship with customers meets the threshold of being unfair.

“This, and subsequent comments from the FCA about setting up a compensation scheme which could still result in hefty payouts may have created mild concern, but Lloyds has notably confirmed any further provisions in this area are unlikely to be material.

“Barclays shares also got a boost, albeit a more limited one reflecting its lesser exposure in this area, while Close Brothers, which had almost been sent to the scrapyard by investors over the affair, sparked into life off the back of the Supreme Court judgement.

“Essentially, while this issue could still cause some damage, it looks unlikely to be a repeat of the PPI scandal which blighted the banking industry in the 2010s.

“The gap between existing provisions by lenders and the sums being talked about by the FCA is substantial but this could partly reflect the fact that the finance arms of the major car manufacturers do not seem, to date, to have made material provisions in this area.”

Clarkson

“Clarkson is right at the sharp end of the tariff turmoil given the shipping broker’s reliance on global trade so investors will be relieved by its resilient first-half numbers and unchanged full-year guidance.

“Having issued a major profit warning in May after warning about growing risks alongside its full-year results in March, the market is clearly pleased that the outlook has not got worse than it already was.

“Although, a hint of further turbulence is provided by the suggestion results will be weighted towards the second half.

“This is often, although not always, a recipe for disappointment as the hoped-for improvement in performance doesn’t come through and the company is forced to downgrade expectations.”

BP

“If BP wanted a piece of news to convince the markets of its renewed focus on hydrocarbons ahead of its second-quarter numbers later this week then its biggest oil discovery in a quarter of a century provides it.

“The full significance of the find in Brazil will take time to establish, and there are initial suggestions it could be challenging to develop given elevated levels of carbon dioxide being detected, but it certainly helps with the narrative.

“With a new chair in place, BP will want to use its latest numbers to convince the market it has truly revamped its strategy and moved away from the green push which proved unpopular with a significant portion of its shareholder base.”