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European Stock Futures Higher; Strong HSBC Earnings Help

European stock markets are expected to open higher Monday, helped by a degree of stability in Asia overnight and strong results from banking giant HSBC.


At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.5% and the FTSE 100 futures contract in the U.K. rose 0.4%.


Asia markets traded higher Monday, creating a positive handover for Europe, as Chinese equity markets stabilizing after last week’s heavy selloff on the back of the crackdown by local regulators on the tech and education sectors. The tone was helped by a call from Chinese regulators for dialogue with their U.S. counterparts over Chinese companies' listings in the U.S.


However, China’s factory activity growth slowed sharply in July, with the Caixin manufacturing purchasing managers’ index falling to 50.3, its lowest level since April 2020.


Also helping the tone Monday were strong quarterly results from HSBC (LON:HSBA), Europe’s largest bank by assets. The banking giant’s pretax profit for the first half of the year came in at $10.8 billion, more than double the performance for the same period last year. It also reinstated its dividend payments and released $700 million that had been set aside to cover potential bad loans.


Elsewhere, Heineken (OTC:HEINY), the world's second-largest brewer, beat first-half earnings expectations, but warned of weakness in the rest of the year as costs eat into margins.


AXA (PA:AXAF) reported an 180% increase in net income in the first half, as Europe’s second-largest insurer rebounded from last year's Covid-19 hit.


In economic news, German retail sales rose 4.2% in June, a slowdown from a revised rate of 4.6% the previous month, but most attention will be on manufacturing PMI data for the European region as a whole which could show a slowdown.


Across the Atlantic, the July U.S. jobs report on Friday will be the main economic release this week, as this could influence the U.S. Federal Reserve’s thinking over when to start reducing its bond purchases. Fed board member Lael Brainard restated the central bank's focus on further

labor market progress at the weekend.


Elsewhere, oil prices weakened Monday in response to the Chinese factory data.

At 2 AM ET, U.S. crude futures traded 1.1% lower at $73.11 a barrel, while the Brent contract fell 1.3% to $74.47.


Additionally, gold futures fell 0.3% to $1,812.30/oz, while EUR/USD traded largely flat at 1.1871.

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