Stocks were trading firm in London early Monday, supported by a positive outlook from Pearson, while purchasing managers' index scores were providing a fresh reading on global economic strength.
With numbers out already from China, Japan, and the eurozone, the results weren't good, as expected. The PMI for the UK is due at 0930 BST and for the US at 1445 BST.
The eurozone manufacturing sector fell into contraction, showing a PMI score of 49.8 points, slightly better than the flash reading of 49.6 but still down from 52.1 in June and below the neutral 50 mark.
Meanwhile, retail sales in Germany massively fell short of expectations.
As the week progresses, central banks will move back into focus, with a policy decision from the Reserve Bank of Australia on Tuesday and one from the Bank of England on Thursday.
The FTSE 100 was up 23.87 points, or 0.3%, at 7,447.30 early Monday. The FTSE 250 index was up 17.53 points, or 0.1%, at 20,182.43. The AIM All-Share index was down 1.25 points, or 0.1%, at 920.55.
The Cboe UK 100 index was up 0.3% at 744.14. The Cboe 250 was up 0.1% at 17,590.65. The Cboe Small Companies was flat at 13,880.60.
In Paris, the CAC 40 stock index was up 0.3%, while in Frankfurt, the DAX 40 was mixed.
China's manufacturing sector saw momentum fade in July as the Caixin PMI slipped dangerously close to the no-change mark of 50.0. The PMI fell to 50.4 points in July from 51.7 in June, indicating just marginal growth was achieved last month.
Growth in Japan's manufacturing economy also slowed. The headline au Jibun Bank PMI slipped to 52.1 points in July from 52.7 in June.
Compounding the negative mood, a busy day of eurozone data got off to a poor start.
German retail sales undershot expectations in June and registered the worst fall since records began in 1994.
Retail sales plunged 8.8% on an annual basis in June, reversing a 1.1% increase in May and coming in below already downbeat expectations of an 8% decline, according to FXStreet-cited consensus.
Month-on-month, sales were down 1.6% in June, having been expected to rise 0.2% after May's growth of 1.2%.
The euro remained firm, despite the data, as the dollar, which has struggled in the wake of the US Federal Reserve's interest rate decision last week Wednesday, fell against major counterparts.
The euro traded at $1.0235 shortly after the European equities open on Monday, up from $1.0196 late Friday.
The pound was quoted at $1.2195 early Monday, up from $1.2163 at the London equities close on Friday. Against the yen, the greenback faded to JP¥132.12 from JP¥133.45.
The dollar hit an intraday low of JP¥132.08, its worst level since mid-June.
In London, HSBC climbed 5.9%.
The China-focused lender vowed to increase returns to shareholders, as it looks set to benefit from the current interest rates cycle.
In the six months to June 30, HSBC's pretax profit fell to $9.18 billion from $10.84 billion a year before.
Keeping a lid on profit was HSBC reserving for $1.09 billion in expected credit losses, swinging from a $719 million release the year prior. The bank said the provision reflects ‘heightened economic uncertainty and inflation’.
In the first half, net interest income rose to $14.45 billion from $13.10 billion, aided by rising interest rates around the world.
The bank declared an interim dividend of $0.09, rising from the $0.07 distributed a year prior. Looking ahead, HSBC said it is targeting a payout ratio of around 50% for 2023 and 2024.
‘We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to revert to quarterly dividends in 2023,’ Quinn said.
London-listed lenders were higher in a positive read across. Barclays climbed 2.9%, StanChart added 2.1% and NatWest rose 1.6%.
Quilter surged 17%, the best mid-cap performer. The Daily Mail over the weekend reported NatWest is mulling a bid for the wealth management firm. CVC, Bain Capital and BC Partners also have shown interest in Quilter, which currently has a market capitalisation of £1.73 billion.
Pearson added 5.6%, as the education publisher posted a rise in interim sales and profit.
‘Pearson has delivered another encouraging financial performance in the first half of the year. We continue to make excellent strategic and operational progress, with momentum across the business. We are already seeing clear benefits from our increasingly diverse learning ecosystem, with Pearson serving more people across their lifelong learning journeys,’ Chief Executive Andy Bird said.
Revenue in the first half of 2022 increased 12% to £1.79 billion from £1.60 billion a year before. Pretax profit jumped to £179 million from just £4 million. Pearson had booked £85 million in restructuring costs a year earlier.
Adjusted operating profit was 26% higher year-on-year at £160 million from £127 million.
Pearson upped its payout by 4.8% to 6.6 pence per share from 6.3p.
Pearson is launching strategic review of its Online Program Management business, which is part of its Virtual Learning segment. The OPM review comes ahead the end of Pearson's contract with Arizona State University next June.
XP Power lost 4.1% as its revenue growth was capped by material shortages, lockdowns in China, and long lead-times.
The maker of power controllers said revenue in the six months to June 30 grew 3.1% year-on-year to £123.6 million from £119.9 million. In the first-quarter alone, revenue had risen 8.2%.
‘While underlying demand remained strong across all sectors, a combination of external supply chain factors, which restricted our capacity to deliver to customers, and inflationary pressures have produced a challenging backdrop in the first half. The team is working hard to mitigate these industry-wide challenges, with an improvement in performance in Q2 being sustained into the early weeks of the second half,’ Chair James Peters said.
Peters added that there is a ‘wider range’ of possible annual outcomes than in other years, including the possibility of its outturn falling short of analyst expectations.
Elsewhere in London, Senior rose 2.7%, though its interim profit fell on the absence of a chunky disposal gain it booked a year earlier.
In the first half of 2020, pretax profit halved to £11.1 million from £22.3 million a year earlier.
It reported £300,000 in costs related to the acquisition of Spencer Aerospace, a Valencia, California-based maker of high-pressure hydraulic fluid fittings. Senior announced the purchase in June; it will pay up to £100 million. Senior on Monday said its expects the acquisition to complete in the current quarter.
A year earlier, Senior had booked a £24.2 million gain on the disposal of Senior Aerospace Connecticut.
Half-year revenue rose 21% to £402.2 million from £332.8 million a year earlier.
Senior reinstated its dividend with a 0.3p per share payout.
Berenberg said Senior's results were comfortably ahead of consensus estimates. ‘We are a little surprised that full-year guidance has not been raised given the strong first-half results, but we can only assume management is choosing to take a conservative approach given ongoing supply-chain and inflationary headwinds’ said analysts Ross Law and George McWhirter.
Construction firm Galliford Try added 4.5% after announcing it has been appointed to £56 million worth of public sector pacts in the UK.
In Tokyo on Monday, the Nikkei 225 closed up 0.7%. The S&P/ASX 200 in Sydney also climbed 0.7%. In China, the Shanghai Composite ended up 0.2%, while the Hang Seng Index in Hong Kong was 0.3% higher in late trade.
Brent oil was quoted at $103.49 a barrel early Monday, down from $105.24 late Friday. Gold stood at $1,766.48 an ounce, up from $1,763.38.
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