Lloyds Banking Group (LLOY)

Though the UK bank’s results were in order on 31 July, investors reacted badly to the provision of an extra £1.4bn for PPI mis-selling claims. The total cost of its PPI nightmare is now a massive £13.4bn, two thirds of its £20bn 2008 bailout package. Could this be the last tranche of provisions? £1.2bn in statutory profits reported on the same day (implying 38% growth) came in below consensus, while we’re sceptical about the bank’s decision to consider a share buyback rather than a special dividend for those already invested. But all this is only relevant to those seeking a long term value investment. As an investor interested in capital returns, you may be interested to hear that brokers are still tipping the stock for 100p plus, implying 17% upside from here.

Will shares recover towards 6-year highs 90p and above? or will they break down towards the channel floor 82p?

Technical observations

• Shares have broken below the 100-day moving average

Bloomberg Broker Consensus,  LLOY:  45% Buy, 38% Hold, 17% Sell;

Consensus target: 92.5p (+11%)

International Consolidated Airlines Group (IAG)

Low oil prices have clobbered those drilling for the stuff, but airlines have loved it. Add in a good old bit of M&A and you have a potential winner in IAG, whose share price has retreated in the wake of confirmation that it will buy Irish flag carrier Aer Lingus (with Ryanair recently agreeing to sell its considerable stake to the owner of British Airways), shareholders likely mindful of the large capital outflows that will be needed to complete the deal. But in the long run, IAG has simply bought another airline. With oil set to stay low for the foreseeable future, both of the UK 100 carriers (IAG and EasyJet) are well worth a look for opportunities long and short.

Will shares bounce back towards 6-year highs 90p and above? or will they break down towards the channel floor 82p?

Technical observations

• Shares found support at the 50-day moving average

Bloomberg Broker Consensus, IAG:  81% Buy, 15% Hold, 4% x Sell;

Consensus target: 643p (+16%)