European mixed equities; HSBC Gains on Q3 Results


By Peter Nurse

Investing.com – European stock markets traded mixed on Monday morning, with investors weighing in on the good results of banking giant HSBC as well as the latest outbreak of Covid-19 in China.

At 4.30am ET (0830 GMT), the DAX in Germany was trading up 0.2%, the UK FTSE 100 climbed 0.5%, to a 52-week high, while the CAC 40 in France fell 0.1%.

HSBC (LON: HSBA) stock rose 0.2% after the British banking giant, one of Europe’s largest, beat expectations with a 74% increase in profit in the third quarter, posting pre-tax profit of $ 5.4 billion compared to $ 3.1 billion a year earlier.

As with Wall Street’s results last week, these were aided by the release of cash set aside for expected bad debts that did not materialize. HSBC also announced a share buyback of up to $ 2 billion, but said it would not reinstate its dividend yet.

Remaining in the banking sector, Banca Monte dei Paschi di Siena (MI: BMPS) stock fell more than 5% after UniCredit (MI: CRDI), down 1.8%, and the Italian government canceled the negotiations on the sale of the troubled bank.

Elsewhere, shares of Lufthansa (DE: LHAG) rose 0.8% after the managing director of the German airline said on Monday that business jet travel is recovering faster than expected and is expected to remain strong throughout Winter.

Still, concerns are growing that an increase in Covid-19 cases in China, a key driver of global growth, will affect global demand.

China warned on Monday that new infections would increase in the coming days after the latest outbreak spread to 11 provinces, causing the lockdown of Ejin, a county in northwest Inner Mongolia that has seen the most cases of Covid-19. China is one of the few countries to still adopt a ‘zero tolerance’ attitude towards Covid, preferring economically costly blockages to the acceptance that the disease will become endemic.

Goldman Sachs (NYSE: GS) downgraded its forecast for Chinese economic growth over the weekend, saying it will likely rise 5.2% next year, from a previous projection of 5.6%.

The Ifo Institute in Germany has published its October Business Climate Survey earlier Monday, and the index slipped to 97.7, from the revised 98.9 the month before. Elsewhere in Germany, Zooplus (DE: ZO1G) stock rose 0.6% after a takeover battle between two private equity firms for the pet supplies retailer ended in a joint offer which seems likely to be approved by its board of directors.

Crude prices rose on Monday, hitting multi-year highs as global supply remains tight and demand strong as the economic recovery from Covid-19 continues.

At 4:30 a.m. ET, U.S. crude futures were trading up 0.9% to $ 84.47 per barrel, just below the highest level since October 2014, while the Brent contract rose 0.7% to $ 85.22, just above the October 2018 high.

Additionally, gold futures rose 0.3% to $ 1,801.05 / oz, while EUR / USD traded 0.1% to 1.1656.

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