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Break-up calls were resisted by HSBC today as the banking giant sought to win over shareholders with a big increase in dividend payments.
The bank, which is under pressure from Chinese insurer Ping An to spin off its Asian business, said it was more than two years into a transformation that will ultimately deliver higher returns for shareholders.
Today’s half-year results benefited from a 62% second quarter surge in profits as boss Noel Quinn promised to restore the dividend to pre-Covid levels as soon as possible.
Wider markets faltered as a series of weak-looking economic reports took the edge off the mood.
FTSE 100 Live Monday
Economy fears take the edge off markets
HSBC boosts shares with dividend plan
15:36 , Michael Hunter
Strong gains for banks limit overall pressure of FTSE 100
15:36 , Michael Hunter
HSBC was the standout gainer among London-listed banks after upbeat forecasts and plans to return to paying quarterly dividends helped financials offset pressure from industrial and energy stocks after a mainly weak run of global economic data.
Shares in Europe’s biggest bank were up almost 7% at 549p after it said the outlook for rising interest rates at global central banks helped it set net interest income forecast of “at least $31 billion for 2022 and at least $37 billion for 2023”. It also moved to fend off calls from some investors for the group to be split into separate Asian an European businesses with the plan to move back to quarterly payouts.
Fellow financials also rose. Barclays was up 1.8% to 160p. Standard Chartered gained 2% to 575p. NatWest was up 2.3% at 254p at the start of a week when the Bank of England is expected to lift UK interest rates, with some City forecasters predicting a 0.50% increase, double policymakers usual hike of 0.25%. The Monetary Policy Committee will announce its decision on Thursday
Overall, the FTSE 100 slipped 8 points to 7415.5 on Monday afternoon, in line with a cautious feel to trade on global markets after a run of largely lacklustre economic data from the manufacturing sector.
Wall Street’s S&P 500 turns positive after US manufacturing data
15:09 , Michael Hunter
Manufacturing data from the US is just out, completing an otherwise lacklustre run of purchasing managers’ index numbers from around the world with a better-than-expected reading.
It came in at 52.8 for July, better than the 52.0 predicted in analysts’s consensus forecasts. It was still a drop from the previous months 53, and takes the gauge nearer the 50-mark that separates expansion from contraction.
After the data, Wall Street’s S&P 500 moved from negative territory to tick up overall, by just 3 points 4,133.0.
Wall Street stocks fall as run of factory output data is set to reach the US
14:42 , Michael Hunter
Wall Street’s S&P 500 fell in opening trade after a wave of weak-looking economic data stoked cautious sentiment on global markets.
The broad US stock gauge slipped 27 points to 4103.31 ahead of the July reading of the influential ISM purchasing managers’ index for America’s manufacturing sector. Forecasters expect to slip to 52 from 53 in June, taking it closer to the 50 mark which separates expansion from contraction.
It is due out in New York after a run of lacklustre numbers for the sector in the eurozone and the UK, as well as in China and Japan as soaring inflation rates around the world lift companies’ costs and limit customers’ spending power.
UK industrial stocks falter after factory output takes a hit
14:26 , Michael Hunter
UK Industrial stocks were among the most notable fallers in afternoon London trade, as investors measured the implications of a drop in output from the country’s factories in July
The cost-of-living crisis eroded domestic demand while exports also stuttered, taking the purchasing managers’ index compiled by S&P Global down to 52.1, from 52.8 in June in the first fall since May 2020. The data providers said it stayed above reading of 50 which separates expansion from contraction “due to faster jobs growth, rising stocks of purchases and longer vendor lead times.”
Shares in Intertex, the global inspection and product testing group, were down 2.9% at 4250p. Ashtead, which rents out industrial equipment, fell 1.8% to 4508p. IMI, the Birmingham-based engineer, fell 3.7% to
Brent Crude price under pressure after slew of lacklustre economic data
12:45 , Michael Hunter
Brent Crude, the benchmark oil price, is slipping in afternoon London trade after a series of weak-looking data painted a bleak picture for global economic growth, for which the commodity is often seen as a proxy.
Numbers out from across the eurozone showed the currency area’s manufacturing sector contracted in July, a trend led by a slowdown in Italy. It came as businesses and consumers alike grapple with soaring inflation, which is raising costs and limiting spending power. German retail sales also showed that shoppers in Europe’s biggest economy were cutting back, falling at a record pace in June.
There was also sobering data out in the Asian trading day from Japan and China, where slowing factory activity pointed to a potential drop in demand for energy. US manufacturing data is due out later in the afternoon.
Brent contracts for October delivery slipped 1.5% to just over $102 a barrel, with the outlook for global growth for the rest of the year uncertain at a time when global central banks are lifting interest rates in order to tame inflation.
Banks help FTSE stay positive after HSBC sets sights on a return to quarterly dividend
12:03 , Michael Hunter
Financial stocks lent support to the FTSE 100 in afternoon trade, after the biggest name in the sector announced plans to resume a quarterly dividend pay-out to investors.
HSBC strode almost 7% higher to 548p also helped by a move to beef up one of its main profit targets as it continues to resist break-up calls from one of its own investors -- Ping An Insurance -- which thinks the UK-based bank would work better with a fully-separated Asian business listed in Hong Kong.
The results also contained timely reminder of how the outlook for higher interest rates at global central banks is improving the mood across the banking sector. HSBC forecast net interest income of “at least $31 billion for 2022 and at least $37 billion for 2023”.
It was enough to bring other banks onto the leaderboard. Barclays rose 2.1% to 161p. NatWest gained 1.9% to 253p. Standard Chartered, the London-listed bank focused on Asian emerging markets, was up 1.8% to 574p.
Overall, the FTSE 100 was 32 points higher at 7456.15 in midday trade. Pearson took top slot on the leaderboard, up almost 9% at 824p after the educational publisher issued an upbeat forecast on demand.
Heineken profits and sales surge in spite of price rises
11:40 , Simon Hunt
Profits at Dutch brewing giant Heineken have been refreshed by robust demand as beer drinkers chose to swallow higher pint prices.
Sales in the first half of the year were up 37% to €16.4 billion (£13.8 billion) while profits soared 25% to a better than expected €2.2 billion, despite an average 8.9% rise in its prices.
The surge was fuelled by European drinkers flocking back to pubs and bars and strong growth in Asian markets. Low and no-alcohol beer saw double-digit growth in more than 20 countries.
But the brewer dropped its previous target of raising profit margins to 17%. Shares fell 2% early today.
English language learning online boosts Pearson
11:18 , Simon Hunt
A jump in English language learning sales thanks to the reopening of borders after Covid travel restrictions eased helped boost profits at education group Pearson.
The London-based firm said “improving global mobility” led to a 22% growth in English language online packages.
The company said it planned to reduce costs by £100 million in 2023, including a cut in “people costs” though boss Andy Bird would not confirm how many redundancies the savings could entail.
Underlying operating profits rose 26% to £160 million in the first half of the year. Pearson shares rose 7%.
FTSE 100 up despite economic gloom
10:11 , Graeme Evans
Worrying economic data from China and Germany today failed to dent buying appetite after July’s revival in stock market fortunes.
Stronger banking stocks meant the FTSE 100 index added another 0.5% or 37.82 points to 7461.25, having surged by 4% as many European and US indices enjoyed their best month since November 2020.
Sentiment has improved thanks to recent earnings updates and hopes that the Federal Reserve is close to slowing the pace of interest rate rises.
Today’s latest progress came despite an unexpected decline in German retail sales and a weaker manufacturing activity reading from China.
Centrica and BAE Systems were among strong performers with gains of 2%, but there was no respite for former GSK arm Haleon as shares in the Sensodyne maker fell another 1.7p to 290p.
The FTSE 250 index climbed another 44.09 points to 20,208.99, led by wealth manager Quilter on speculation that it is a potential target for NatWest. Shares surged 13% or 13.4p to 118.4p.
FTSE 100 higher, Pearson surges 6%
08:53 , Graeme Evans
A rally for banking stocks following second quarter results from HSBC helped the FTSE 100 index to improve 19.15 points to 7442.58.
HSBC shares jumped 6% or 32p to 545.7p as it provided dividend payout ratio guidance of around 50% of earnings for 2023 and 2024. Net profit also rose by 62% in the second quarter, which was much better than City expectations.
Barclays shares rose 3% and NatWest added another 1.5%, having risen strongly on Friday after the state-backed lender revealed plans for £2.1 billion of shareholder returns.
Coursework publisher Pearson was the biggest riser in the FTSE 100 index, lifting 6% or 48.4p to 805p as it hiked its dividend by 5% and stuck by full-year guidance.
The FTSE 250 index was broadly unchanged at 20,158, with wealth management firm Quilter the best performing stock after shares surged 18.25p to 123.25p.
Earnings eyed after big July rebound
08:17 , Graeme Evans
A surprise recovery in risk appetite meant European and US stock markets posted their best month since November 2020, with the FTSE 100 index up 3.6% in July.
The rebound on Wall Street was particularly robust as investors latched on to a largely resilient batch of corporate earnings and signs that the Federal Reserve is close to scaling back the pace of its interest rate hikes
The tech-focused Nasdaq led the way with a gain of more than 12% in the month, putting back a big chunk of the losses seen during a wretched first six months of the year.
The start of the new month is likely to see a pause in momentum as investors eye another big week of corporate earnings, with numbers due from PayPal and Starbucks in the United States and BP and Rolls-Royce in the UK.
The calendar also includes the latest meeting of the Bank of England monetary policy committee, where a 0.5% rise in interest rates will be among the options.
The pound traded at just below $1.22 versus the US dollar today, while the FTSE 100 index is broadly unchanged at 7429.