London open: HSBC results, lockdown speculation weigh on Footsie
Stocks in London are on the back foot at the start of August, weighed down by a retreat in lenders' shares and reports pointing to increasing odds that stricter Covid-19 restrictions are in the pipeline, both in the UK and the US.
On top of HSBC warning that its full-year loan losses could hit $13bn, it was reported at the weekend that while the UK government wants to avoid another full national lockdown, special measures could be put in place, especially for London.
Nevertheless, JP Morgan strategist, John Normand, was relatively sanguine, writing: "Some misgivings are justified given a macro backdrop that is becoming muddied, but not muddied enough to justify bearish targets or a defensive investment strategy.
"The intersection of a U.S. growth downshift with expiring income supports preserves the risk of a market correction in August, but drawdown should be limited due to investor positioning."
Against that backdrop, as of 0831 BST the FTSE 100 was down by 0.61% or 17.6 points to 5,880.16, while sterling was at 1.3079 and remained near its roughly two year highs.
But it wasn't all bad news on Monday morning.
Overnight, survey compiler Caixin's Purchasing Managers' Index printed at a more than nine-year high of 52.8 for July, up from 51.2 for June (consensus: 51.1).
A late rally on Wall Street last Friday was also propping up sentiment.
To take note of, also at the weekend, Federal Reserve Bank of Minneapolis chief, Neel Kashkari, pushed for a "hard" four-to-six week lockdown which he said would be optimal for the US economy.
Once cases were low enough, authorities would then be able to implement a 'track and trace' strategy.
Coincidentally, last Friday Google announced that it was working with 20 US states and Apple to roll-out a coronavirus contact-tracing app over the following weeks.
Tensions between Beijing and Washington continued in the background meanwhile, with US Secretary of State, Mike Pompeo, signalling that the Trump administration was set to clamp down on an array of Chinese state-controlled software manufacturers due to national security concerns.
The main data release ahead on Monday will be the US Institute for Supply Management's manufacturing PMI, at 1500 BST.
Final readings on comparable surveys for the UK and euro area are scheduled to be published at 0930 BST and 0900 BST.
Hammerson in push to boost liquidity
Following press speculation over the weekend, Hammerson confirmed on Monday that it is in discussions over a possible disposal of its 50% interest in VIA Outlets to its joint venture partner APG, and was also considering an equity raise via a rights issue. The FTSE 250 firm said it was taking “proactive measures” around its cost base and cash flow, and had secured approval for the issue of up to £300m under the Covid Corporate Finance Facility (CCFF) from the Bank of England. It said that, following the reopening of its flagship destinations across Europe, footfall and sales were improving, with third quarter rent collection in the UK now over 30%.
HSBC interim profits plunged 65% as it increased provisions for bad debts by $3.8b amid the coronavirus crisis. The Asian-Anglo bank set aside $3.8bn to cover potential loan losses in the three months to June from $555m a year ago, more than the $2.7bn estimated in company-compiled analyst forecasts. Full-year loan losses could be $8bn - $13bn, HSBC said, “given the deterioration in consensus economic forecasts and actual loss experience" during the second quarter.
Hiscox swung to a loss in the first half as the Lloyd's of London insurer set aside $232m for Covid-19 related claims. The company reported a pretax loss of $138.9m (£106m) for the six months to the end of June compared with a $168m profit a year earlier. Gross premiums written fell to $2.236bn from $2.338bn.
FTSE 100 - Risers
Fresnillo (FRES) 1,267.50p 2.84%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,424.00p 2.11%
Ashtead Group (AHT) 2,471.00p 1.48%
Smurfit Kappa Group (SKG) 2,568.00p 1.10%
Scottish Mortgage Inv Trust (SMT) 877.50p 0.98%
Relx plc (REL) 1,630.00p 0.93%
Rio Tinto (RIO) 4,655.50p 0.88%
Hargreaves Lansdown (HL.) 1,764.00p 0.86%
Bunzl (BNZL) 2,216.00p 0.82%
Experian (EXPN) 2,698.00p 0.78%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 219.00p -5.44%
HSBC Holdings (HSBA) 326.25p -4.66%
ITV (ITV) 54.68p -3.53%
International Consolidated Airlines Group SA (CDI) (IAG) 159.50p -3.19%
Standard Chartered (STAN) 374.30p -2.98%
British Land Company (BLND) 355.80p -2.81%
Land Securities Group (LAND) 560.40p -2.81%
M&G (MNG) 156.50p -2.55%
BT Group (BT.A) 96.08p -2.54%
JD Sports Fashion (JD.) 591.60p -2.31%
FTSE 250 - Risers
IP Group (IPO) 75.00p 12.78%
XP Power Ltd. (DI) (XPP) 4,030.00p 5.77%
PureTech Health (PRTC) 283.00p 4.04%
FDM Group (Holdings) (FDM) 955.00p 2.69%
TI Fluid Systems (TIFS) 178.60p 2.64%
Calisen (CLSN) 171.90p 2.60%
Scottish Inv Trust (SCIN) 746.00p 2.33%
Polar Capital Technology Trust (PCT) 1,994.00p 2.26%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,424.00p 2.11%
Scottish American Inv Company (SAIN) 420.00p 1.94%
FTSE 250 - Fallers
Hammerson (HMSO) 58.94p -8.16%
Hiscox Limited (DI) (HSX) 735.00p -5.96%
Mitchells & Butlers (MAB) 144.80p -5.36%
Provident Financial (PFG) 156.00p -4.88%
Rank Group (RNK) 130.40p -4.54%
Trainline (TRN) 390.80p -4.45%
Shaftesbury (SHB) 492.40p -4.11%
Carnival (CCL) 794.40p -3.90%
Wetherspoon (J.D.) (JDW) 814.00p -3.67%
National Express Group (NEX) 146.40p -3.37%