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FTSE 100 opens higher, HSBC, Pearson advance

Published 01/08/2022, 08:34
Updated 01/08/2022, 08:40
© Reuters.  FTSE 100 opens higher, HSBC, Pearson advance

© Reuters. FTSE 100 opens higher, HSBC, Pearson advance

FTSE 100 opens higher

• HSBC results please, banks move higher

Pearson (LON:PSON) advances after raising margin guidance

FTSE 100 shrugged off concerns of weak Chinese PMI data to make a strong start to trading.

At 8.30am the lead index was trading 27.54 points higher at 7,431.47 supported by strength in the banking sector once more after results from HSBC.

China’s PMI fell unexpectedly to 49.0 in July, from 50.2 in the previous month and below forecasts of 50.4.

Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown (LON:HRGV), said:

“There was a very mixed bag hidden within the results, with core trends showing the negative effect of new lockdowns in key cities and general concerns over the global economy, following sharp monetary tightening efforts.”

“ Output, new orders, buying levels and export orders all shrank. This latest data set does very little to offset concerns around darkening global economic output, especially when put together with a further easing of sentiment.”

But this news was offset by positive earnings updates from HSBC and Pearson.

HSBC shares rose 6% on better than expected results and as it gave new guidance on future dividends levels.

Noel Quinn, Group Chief Executive, said:

“ We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”

“As a result, we are providing more specific dividend payout ratio guidance 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."

The banking group reported a US$1.7bln fall in first half pre-tax profits to $9.2bln, reflecting a net charge for expected credit losses and other credit impairment charges.

Media group, Pearson, topped the FTSE 100 risers with shares up 6.85% after it raised its margin guidance as it reported first half results today.

Adjusted operating profit rose by £33mln to £160mln in the six months to June driven by an encouraging trading performance, FX benefit and property savings, partially offset by inflation, portfolio investment and the phasing of costs last year.

The group said it has identified further efficiencies of at least £100mln for 2023 which it added accelerates its improved margin expectation to 2023 from 2025.

FTSE 100 seen opening slightly lower, results in focus

• FTSE 100 seen slightly lower

• HSBC, Pearson in focus after results

• Investors eying MPC decision later this week

FTSE 100 seen slightly softer as trading begins with spread betting companies calling the lead index down around 12 points in early trading.

US markets finished strongly on Friday with the DJIA closing up 316 points, 1%, at 32,845, while the Nasdaq Composite added 228 points, 1.9%, to 12,391 and the S&P 500 improved 58 points, 1.4%, to end at 4,130.

Friday marked the third-consecutive positive day for the major benchmarks.

In the UK focus will switch to August’s MPC meeting with an interest rate rise of 25bps-50bps expected.

HSBC gave new dividend guidance as it reported first half results today.

Noel Quinn, Group Chief Executive, said:

“ We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”

“As a result, we are providing more specific dividend payout ratio guidance 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."

The banking group reported a US$1.7bln fall in first half pre-tax profits to $9.2bln, reflecting a net charge for expected credit losses and other credit impairment charges.

Reported credit impairment charges were $1.1bln although operating expenses fell by 4% primarily due to foreign exchange translation impacts.

Quinn added: "Our first-half performance reflects the continued impact of our strategy, with gathering revenue momentum and tight cost control.”

“ The progress that we've made growing and transforming HSBC means we are in a strong position as we enter the current rates cycle.”

Media group, Pearson, raised its margin guidance as it reported first half results today.

Adjusted operating profit rose by £33m to £160m in the six months to June driven by an encouraging trading performance, FX benefit and property savings, partially offset by inflation, portfolio investment and the phasing of costs last year.

The group said it has identified further efficiencies of at least £100mln for 2023 which it added accelerates its improved margin expectation to 2023 from 2025.

It reaffirmed revenue and operating guidance for the full year.

Cranswick (LON:CWK) Group provided investors with an update on trading for the first quarter adding the outlook for current financial year remains in line with the Board’s expectations.

Revenue in the 13 weeks to 25 June 2022 was 7.6% ahead of the same period last year with growth in all four UK food product categories.

Far East sales were, as anticipated, lower due to market prices falling.

JD Sports announced the £37.5m disposal of Footasylum Limited to AURELIUS Group.

6.50am: FTSE 100 seen lower

FTSE 100 expected to open slightly lower on Monday, giving up some of the strong gains made on Friday.

Spread betting firms are calling the blue chip index down by around 10 points in early trading.

Results from HSBC and Pearson are due today while August's MPC meeting will also be in focus this week.

Read more on Proactive Investors UK

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