BP Share News (BP.)

(Alliance News) - European markets got off to a good start to August, helped by an improved round of manufacturing PMIs across the globe.

London's blue-chip FTSE 100 index managed to make headway on Monday despite HSBC shares falling nearly 3% as the lender posted a 65% drop in interim profit.

The FTSE 100 index closed up 135.09 points, or 2.3%, at 6,032.85. The FTSE 250 ended up 225.47 points, or 1.3%, at 17,158.12, and the AIM All-Share closed up 7.79 points, or 0.9%, at 892.81.

The Cboe UK 100 ended up 1.9% at 601.50, the Cboe UK 250 closed up 0.9% at 14,528.27, and the Cboe Small Companies ended down 0.3% at 9,090.34.

In European equities on Monday, the CAC 40 in Paris ended up 1.9%, while the DAX 30 in Frankfurt ended up 2.7%.

"It has been a solid day for European equities, and US markets are moving higher as well, helped along by better PMIs from China and the US," said Chris Beauchamp, chief market analyst at IG.

US manufacturing activity improved in July, surveys from IHS Markit and the Institute for Supply Management showed, but the two readings painted differing pictures of the pace of the economy's recovery.

IHS Markit's purchasing managers' index strengthened to 50.9 in July, up from 49.8 in June and moving above the no-change mark of 50 for the first time since February. However, the figure was down from the July flash estimate of 51.3.

The ISM's PMI showed a stronger uptick in conditions, reading 54.2 in July from 52.6 in June.

On the US data, Oxford Economics commented: "We expect manufacturing to grow gradually ahead, with botched management of the pandemic and ongoing virus-related uncertainty set to constrain activity."

Also seeing an improvement in factory activity was China, figures over the weekend showed. The PMI of the world's second-largest economy came in at 51.1 points in July, up from 50.9 the month before.

This was better than the analyst expectations reflected in a Bloomberg poll, which forecast 50.9.

Zhao Qinghe, senior statistician at the National Bureau of Statistics, said production had "generally rebounded" and demand had "gradually warmed up".

There were also manufacturing PMIs from Europe, with strong showings in both the eurozone and UK.

UK manufacturing activity grew at its fastest pace in almost three years in July as factories reopened as coronavirus lockdown measures eased, IHS Markit said. The seasonally adjusted IHS Markit/CIPS PMI rose to a 16-month high of 53.3 in July, up from 50.1 in June but below the earlier flash estimate of 53.6.

The eurozone also saw a sharp uptick in conditions. IHS Markit's eurozone manufacturing PMI climbed to 51.8 in July, beating the flash estimate of 51.1. It was also above the 50.0 neutral mark and the 47.4 registered in June.

IHS Markit noted a 27-month PMI high for Spain, a 25-month high for Italy, and France booked its best showing for 22 months. Both Germany and Austria climbed to 19-month highs.

The pound was quoted at USD1.3041 at the London equities close Monday, down compared to USD1.3125 at the close on Friday.

The euro stood at USD1.1737 at the European equities close Monday, down against USD1.1820 at the same time on Friday.

Against the yen, the dollar was trading at JPY106.19, higher compared to JPY105.77 late Friday.

Stocks in New York were higher at the London equities close, with the DJIA up 0.9%, the S&P 500 index up 0.8%, and the Nasdaq Composite up 1.3%.

In London, the FTSE 100 overcame a share price decline for HSBC to end Monday's session higher.

The Asia-focused lender posted a first-half earnings slump and said its expected credit loss for 2020 could reach USD13 billion.

HSBC shares ended down 2.9%

In the six months to June 30, revenue fell 8.8% year-on-year to USD26.75 billion from USD29.37 billion, the lender said. Pretax profit dropped 65% to USD4.32 billion from USD12.41 billion a year ago.

During the half-year, HSBC booked USD6.86 billion in expected credit losses and other impairment charges, up sharply from USD1.14 billion a year ago.

"Our first half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility. Despite this, our Asia franchise showed resilience, and our Global Markets business delivered strong growth compared with last year's first half. Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now intend to accelerate implementation of the plans we announced in February," Chief Executive Officer Noel Quinn said.

Meanwhile, oil majors closed higher as Brent prices benefited from Monday's risk-on mood. Brent oil was quoted at USD44.11 a barrel at the London equities close Monday, up from USD42.94 late Friday.

Royal Dutch Shell 'A' and 'B' shares both gained 1.9%. BP ended up 2.1%, ahead of its interim results on Tuesday.

It was a more muted session for gold. The precious metal was quoted at USD1,971.10 an ounce at the London equities close Monday against USD1,973.70 at the close on Friday.

In the FTSE 250, XP Power ended up 13% after the critical power control systems supplier posted a fall in interim profit but said it expects further revenue growth in the second half.

Pretax profit for the half ending June 30 was down 20% to GBP10.3 million from GBP12.9 million a year prior. Revenue for the period rose 6% to GBP105.1 million from GBP98.9 million.

The company said: "The board expects further revenue growth in the second half of 2020, although we remain conscious of potential risks arising from a second wave of Covid-19 and the resultant global macroeconomic challenges, and ongoing trade tensions."

IP Group rose 12% after saying its investee Oxford Nanopore Technologies has secured an agreement with the UK Department of Health & Social Care to roll out its novel LamPORE test.

IP Group holds a 16% stake in Oxford Nanopore Technologies.

The FTSE 250-listed intellectual property investor said that under the agreement, an initial 450,000 LamPORE SARS-CoV-2 tests will be made available for use by a number of NHS testing laboratories. It highlighted that results from the test can be obtained in under two hours.

On AIM, Purplebricks ended up 9.3% despite its annual loss widening. For the year to the end of April, Purplebricks reported a widened pretax loss of GBP13.2 million from GBP4.9 million the year before, on revenue that declined by 2% to GBP111.1 million from GBP113.8 million.

The group's widened loss was also a result of higher administrative and establishment expenses at GBP45.5 million from GBP36.3 million. In addition, the results were hurt by the shutdown of the UK property market because of Covid-19.

Looking ahead, the group said it has continued to see new instructions through the pandemic, and the market has started to recover since mid-May, supported by the UK government's Stamp Duty holiday with effect on July 8.

Tuesday's UK corporate calendar, alongside half-year results from oil major BP, has annual results from Smirnoff vodka maker Diageo and interim results from office workspace provider IWG.

Tuesday's economic calendar has eurozone producer prices at 1000 BST.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.