European markets make a cautious start to August trading; HSBC up 6%
LONDON — European stocks were muted on Monday to begin the new month, with investors digesting a fresh round of corporate earnings.
The pan-European Stoxx 600 hovered fractionally above the flatline by mid-morning, with banks adding 1.9% while construction and material stocks dropped 0.4%.
The mixed trade for European stocks comes after the region’s markets closed the month of July higher on Friday, and logged their best month since November 2020.
Investors digested a fresh swathe of corporate earnings and key economic data out of the euro zone last week, with data released last Friday showing economic growth in the euro zone accelerated in the second quarter, despite the escalating gas crisis and record-high inflation.
The 19-member bloc posted a 0.7% rise in gross domestic product, exceeding expectations for growth of 0.2% and contrasting sharply with the negative annualized readings out of the United States in the first and second quarter.
Elsewhere overnight, U.S. stock futures fell following Wall Street’s best month since 2020 as investors look ahead to another week of key earnings reports and economic data, particularly Friday’s nonfarm payrolls report from the Bureau of Labor Statistics, which will give more insight into the strong labor market.
So far this year, the solid growth of jobs has prompted economists to say the U.S. is currently not in a recession, even with two consecutive quarters of negative GDP.
In Asia-Pacific markets, mainland China stocks rose along with most other regional indexes on Monday as a private survey on Chinese factory activity showed slight growth.
Earnings on Monday came from HSBC, Pearson, Heineken and Erste Group.
Pearson shares jumped more than 6.6% in early trade to lea the Stoxx 600 after the British education and publishing company posted strong quarterly results, while HSBC climbed 6% after raising its key profitability goal.
At the bottom of the European blue chip index, Swedish real estate company SBB fell 6.2% after Goldman Sachs downgraded the stock from “neutral” to “sell.”
On the data front, euro zone manufacturing activity contracted in July, S&P Global’s final manufacturing PMI (purchasing managers’ index) revealed on Monday, deepening fears that the bloc could be sliding into recession.
— CNBC’s Carmen Reinicke and Abigail Ng contributed to this market report.