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(Alliance News) - Stocks in London turned higher at midday on Monday as investors took heart from a slew of positive PMI readings across the globe, while HSBC fell after reporting a 65% drop in profit.
Conditions in China's manufacturing industry improved at the quickest pace in nearly 10 years and notched up a third successive month of growth, as the country's economy continued to bounce back from the Covid-19 crisis. Caixin's purchasing managers' index improved to 52.8 in July, from 51.2 in June.
The UK flagship FTSE 100 index was up 28.45 points, or 0.5% at 5,926.21. The mid-cap FTSE 250 index was flat at 16,937.28. The AIM All-Share index was up 2.85 points, or 0.3% at 887.87.
The Cboe UK 100 index was up 0.1% at 590.19. The Cboe 250 was down 0.4% at 14,350.68 and the Cboe Small Companies down 0.5% at 9,076.65.
In mainland Europe, the CAC 40 in Paris was up 0.6% while the DAX 30 in Frankfurt was up 1.4%.
"A mixed start to trading at the start of the week as attention shifts back to how economies are coping with the economic reopening. It's PMI week which means we get an onslaught of economic survey's from around the world, starting with the manufacturing sector today, and so far the releases have looked quite promising. Back in growth territory and surpassing expectations, just what we want to see as businesses try to contend with a new and uncertain future," said OANDA analyst Craig Erlam.
In the FTSE 100, Mexican gold miner Fresnillo was the best performer up 3.5% as gold hit a fresh record high overnight, but gave back ground to trade lower.
Gold was trading at USD1,970.20 an ounce on Monday midday, soft from USD1,973.70 at the London equities close Friday. The precious metal hit a fresh record high of USD1,987.85 in early trade.
At the other end of the large caps, HSBC Holdings was down 4.8% after the Asia-focused bank posted a first-half earnings slump and said credit loss for 2020 could reach USD13 billion.
In the six months to June 30, HSBC said revenue fell 8.8% year-on-year to USD26.75 billion from USD29.37 billion. Pretax profit dropped 65% to USD4.32 billion from USD12.41 billion a year ago.
The profit figure missed the consensus estimate of USD5.69 billion that HSBC had compiled from analysts. During the half, HSBC booked USD6.86 billion in expected credit losses and other impairment charges, up sharply from USD1.14 billion a year ago.
HSBC put the brakes on a wide-ranging redundancy programme as the coronavirus took hold. However, plans to cut around 35,000 jobs worldwide now will be accelerated.
Fellow Asia-focused bank Standard Chartered was down 1.5% in a negative read-across.
The pound was quoted at USD1.3041 Monday midday, down from USD1.3125 at the London equities close Friday, as focus starts to turn to the Bank of England's interest rate decision later this week.
"Once again, we face another week of light UK data, other than Thursday's BoE release. Eyes will once again turn to [Governor] Andrew Bailey, who is now faced with limited options. Chances are he will keep a lid on the current stimulus in place and allow for the government's eat out scheme to get the ball rolling in terms of consumer spending. Due to his limited options, Bailey will only want to act when really needed, which suggests this isn't the best time," OFX analysts said.
On the economic front, 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 purchasing managers' index rose to a 16-month high of 53.3 in July, up from 50.1 in June. Markit highlighted the manufacturing PMI posted above the neutral 50.0 mark separating improvement from deterioration in each of the past two months.
According to Markit, manufacturers linked the expansion to a further loosening of the lockdown conditions in place due to the coronavirus pandemic. This, Markit said, allowed manufacturers to restart, or raise, production in response to clients reopening.
The euro was priced at USD1.1741, down from USD1.1820, despite positive economic data from the continent.
The eurozone recorded its first month of manufacturing growth in a year-and-a-half during July, according to IHS Markit.
IHS Markit's eurozone manufacturing purchasing managers' index 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. Germany's manufacturing sector finally returned to growth in July, after more than a year in the doldrums, IHS Markit said.
The IHS Markit-BME Germany manufacturing purchasing managers' index jumped to 51.0 in July, from the June reading of 45.2.
Against the yen, the dollar was trading at JPY105.74, flat from JPY105.77 in London.
Brent oil was quoted at USD43.35 a barrel Monday midday, up from USD42.94 late Friday.
Stocks in New York look are set to open mixed as investors grow increasingly frustrated by a lack of substantial progress by US lawmakers on a new stimulus package.
The DJIA was called down 0.1%, the S&P 500 index flat and the Nasdaq Composite up 0.5%.
In Washington, Democrats and Republicans remain poles apart from an agreement on a new stimulus bill, even after supplemental unemployment benefits credited with boosting consumption despite soaring joblessness expired at the end of last week.
Meanwhile, shares in Microsoft will be in focus after the trillion-dollar market cap club member confirmed it was in talks to buy the US operations of TikTok from Chinese technology company ByteDance.
Microsoft shares were up 1.9% in pre-market trade in New York.
Secretary of State Mike Pompeo warned that the White House will unveil measures against "a broad array" of Chinese-owned software. Pompeo said TikTok and other Chinese software companies operating in the US, such as WeChat, feed personal data on US citizens directly to the Chinese Communist Party.
The move would add to a laundry list of issues that have seen the economic superpowers butt heads - including Hong Kong, Huawei and the coronavirus - and fan fears about a possible renewal of their trade war.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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