HSBC surprises with share buyback, BP posts sharp drop in 1H profits

London open

Futures for the FSTE 100 were dipping by 8.5 points to 7,680.50.

Stocks to watch

HSBC said that profit before tax more than doubled over the six months ending on 30 June, rising by $12.9bn to $21.7bn. That included the reversal of an impairment charged related to the planned sale of its retail banking operations in France and a provisional gain of $1.5bn on the purchase of Silicon Valley Bank UK. Revenues meanwhile rose by $12.3bn to $36.9bn. The Asia-focused lender also unveiled a second interim dividend of 10 US cents per share and surprised with another share buy back of up to $2.0bn that was expected to complete in three months.

BP reported a sharp 78% drop in its second quarter attributable profits to reach $1.79bn. Capital expenditures also declined, by $4.3bn after a $3.3bn decline over the previous three months. On a replacement cost basis, the oil major's profit fell 73% to $2.34bn. Earnings per share on that same basis meanwhile reduced from $27.74 to $14.77. Its net debt on the other hand rose by 11.4% to $23.66bn.

Fresnillo posted a 6.1% increase in adjusted first half revenues to reach $1.43bn on the back of higher gold and silver volumes and prices. Also on an adjusted basis however, production costs jumped by 17.4% to $773.9m in comparison to a year earlier, as a result of the appreciation in the Mexican peso. Hence, its profit before tax dropped 69.2% to $47.9m and basic diluted earnings per share from continuing operations by 44.7% to 8.8 US cents. Free cash flow reduced sharply, falling from $93.5m in the year earlier period to $18.7m. The miner declared an interim dividend of 1.40 US cents.

In the press

The UK’s biggest retailers have reported the first monthly fall in shop prices for two years, as stores tried to tempt in customers with big discounts during July’s unseasonably wet weather. The British Retail Consortium (BRC) said its annual shop price inflation rate, compiled with the help of NielsenIQ, had declined to its lowest level of the year, sliding to 7.6% last month from 8.4% in June. – Guardian

The UK competition watchdog has said it will decide whether to clear or block Microsoft’s $69bn (£54bn) takeover of the video game developer Activision Blizzard by 29 August, as it gave fresh hope for the transaction by opening a new consultation on it. The Competition and Markets Authority, which had originally said in April it would block the deal to take over the owner of hit titles such as Call of Duty, World of Warcraft and Candy Crush, is seeking public contributions on whether it should clear it after a new submission from Microsoft. – Guardian

Vladimir Putin’s decision to block Ukrainian grain exports means British families will face higher food prices for longer than expected, the supermarkets trade body has warned. Inflation has been falling in recent months but prices on global food markets have shot up in the past fortnight as Russia rains missiles down on Ukrainian ports used to transport grain. – Telegraph

US close

Wall Street's main market gauges ended the day slightly higher to cap off a fifth consecutive month of gains.

The Dow Jones Industrial Average edged up 0.28% to 35,559.53, alongside a 0.15% rise for the S&P 500 to 4,588.96.

In parallel, the Nasdaq Composite rose 0.21% to 14,346.02.

Joshua Mahony, chief market analyst at Scope Markets, said: "Earnings remain a key driver of markets as we move through the second quarter, with big hitters Apple and Amazon maintaining the tech theme this week.

"[...] With 51% of the S&P 500 having reported, this marks the halfway point for Q2 earnings season. It has been notable that those initial reports have seen the blended earnings growth rate for Q2 drop to -7.3% (vs 7% expected), despite seeing 80% of the companies outperform estimates."