Next week on the stock market

Trading strength and disposals to accelerate BP’s balance sheet repair

BP’s third-quarter adjusted net profit is expected to more than double year on year to over £5.5bn, though slightly below the previous quarter. Average realised oil prices eased in the period, creating a $0.2–0.4bn drag on profits. That contrasts with oil’s recent strength, but realised prices typically lag spot-market moves, so the benefits could feed through more clearly in later periods.

Firmer gas prices, and strong gas trading should provide some offset. Upstream production should be broadly steady, as recovery from seasonal maintenance offsets portfolio changes in Latin America and continued Middle East disruption.

Early data shows that BP’s third-quarter refining margins have risen sharply to $46.7 per barrel, providing a substantial tailwind, but customer margins have been under pressure. BP also expects $3.0–4.5bn of non-cash impairments, mainly against transition businesses.

Strong cash management and disposals should help net debt fall sharply from $22.3bn to $13.5–14.5bn. That strengthens the case for buybacks returning, but investors should not assume an immediate restart.

Lloyds and NatWest could lift income guidance as rate expectations rise

Lloyds and NatWest report next week, and both are expected to post strong numbers. Even so, the shares have come under pressure in recent weeks, and the backdrop is more complicated than the headline numbers suggest. Results land in the same week as the UK Budget, which could put bank profits under the microscope. Rising government bond yields cut both ways, too. Higher rates boost what banks earn on loans, but if they go too far, borrowers start to feel the squeeze.

Both banks' guidance assumes no rate rises from the Bank of England this year, but we’re looking on track for a November hike. Their medium-term targets are also based on lower rates than markets currently expect. We think that leaves room for better income guidance.

Expect some cautious comments and possibly a modest top-up to bad loan provisions. But borrowers look resilient enough that in our view higher rates should stay a net tailwind.

Alphabet, Microsoft and Amazon need to beat and raise expectations to impress

It's a big week for US tech. Alphabet, Microsoft and Amazon are all expected to report on Wednesday. Cloud growth will grab the headlines after Google Cloud, AWS and Azure all sped up last quarter, and third-quarter results are usually when the big spenders give a first steer on next year's capex. Bigger numbers shouldn't come as a shock, but the market will want to see revenue keeping pace.

We expect a broadly strong set of results for this trio, with AI demand still a strong tailwind. But with the backdrop getting tougher, simply hitting forecasts is unlikely to be enough. These names need to beat expectations, and raise them, to keep the momentum going.