European markets cautiously start trading in August; HSBC up 6%

LONDON — European stocks were quiet on Monday to start the new month as investors digested a fresh round of corporate earnings.

The pan-European Stoxx 600 hovered 0.2% above the fixed line late in the morning, with banks adding 1.8% while construction and materials stocks fell 0.6%.

The mixed trade for European stocks comes after markets in the region ended July higher on Friday and recorded their best month since November 2020.

Investors digested a fresh slice of corporate earnings and key economic data from the euro zone last week, with data released last Friday showing that economic growth in the euro zone accelerated in the second quarter, despite the escalation of the gas crisis and record inflation.

The 19-member bloc posted a 0.7% rise in gross domestic product, beating growth expectations of 0.2% and contrasting sharply with negative annualized readings from the United States in the first and second quarters.

Elsewhere overnight, US stock futures fell after Wall Street’s best month since 2020, as investors eagerly await another week of earnings reports and key economic data, particularly the report on Friday’s nonfarm payrolls from the Bureau of Labor Statistics, which will give more insight into the strong labor market.

So far this year, solid job growth has prompted economists to say that the United States is currently not in recession, even with two consecutive quarters of negative GDP.

In Asia-Pacific markets, mainland Chinese stocks rose along with most other regional indices on Monday, as a private survey of Chinese factory activity showed slight growth.

Monday’s earnings came from HSBC, Pearson, Heineken and Erste Group.

Pearson shares jumped 8.9% to top the Stoxx 600 after the UK education and publishing company posted strong quarterly results, while HSBC soared 6.5% after rising its key profitability objective.

At the bottom of Europe’s blue chip index, Swedish property company SBB fell 5.7% after Goldman Sachs downgraded the stock from “neutral” to “sell”.

On the data front, euro zone manufacturing activity contracted in July, the S&P Global’s final manufacturing PMI (Purchasing Managers Index) showed on Monday, bolstering fears that the bloc could slide lower. recession.

– CNBC’s Carmen Reinicke and Abigail Ng contributed to this market report.