Europe open: Stocks edge lower but banks rack up healthy gains
European stocks edged lower in early trade, but banks put in a solid performance following well-received earnings from the likes of HSBC, Societe Generale and Credit Agricole.
At 0855 BST, the benchmark Stoxx Europe 600 index was down 0.3%, Germany’s DAX was 0.4% weaker and France’s CAC 40 was off 0.7%.
At the same time, oil prices were little changed, with West Texas Intermediate at $39.49 a barrel and Brent crude at $41.74.
On the corporate front, banks were in focus again following last week’s stress test results, but the news was more upbeat.
HSBC shares rallied despite the bank saying profits fell by more than a quarter amid difficult conditions in the first half of the year, as investors welcomed the announcement of a $2.5bn (£1.8bn) share buyback thanks to the sale of its Brazilian business.
Societe Generale was on the front foot after it posted a jump in second-quarter net profit, while Credit Agricole also gained as it said second-quarter profit pushed up 26%.
Dutch lender ING gained after reporting a big increase in quarterly profit.
Deutsche Post advanced as it said second-quarter net profit increased 51% thanks in part to higher stamp prices and rising parcel volume.
Insurer AXA was in the red after its first-half profit missed analysts’ expectations.
In London, miner Rio Tinto was flat after posting a 47% slump in half-year underlying earnings.
Clothing retailer Next racked up healthy gains as it reported an improvement in sales in the second quarter.
Looking ahead to the rest of the day, the main focus is likely to be on the US ADP employment report, which is widely considered a pre-cursor to Friday’s all-important non-farm payrolls.
Markus Huber, a trader at City of London Markets, said: “In the light of the weak US GDP data last week even a strong number wouldn't necessarily make a rate hike in September more likely.”