European stock markets are expected to open in a steady manner Monday, with investors weighing strong results from banking giant HSBC as well as China’s latest Covid-19 outbreak.
At 2:10 AM ET (0610 GMT), the DAX futures contract in Germany traded 0.1% lower, while CAC 40
futures in France climbed 0.2% and the FTSE 100 futures contract in the U.K. rose 0.1%.
HSBC (LON:HSBA), one of the largest banks in Europe, beat expectations with a 74% rise in third quarter profit, posting pretax profit of $5.4 billion versus $3.1 billion a year earlier, helped by the release of cash set aside for expected bad loans that have not materialized. It also announced a share buyback of up to $2 billion but said it wouldn't restore its dividend yet.
Also helping the tone in Europe were gains in China Evergrande Group (HK:3333) stock in Asia after the embattled property developer averted a costly default last week with a last-minute bond coupon payment. The group also moved Monday to prioritize growth of its electric vehicles business over its troubled core real estate operations.
That said, there are also worries that an increase in Covid-19 cases in China, one of the globe’s main growth drivers, will hit global demand.
China warned Monday that new infections will increase in the coming days after the latest outbreak expanded to 11 provinces, prompting the locking down of Ejin, a county in northwestern Inner Mongolia that has seen the most Covid-19 cases. China is one of the few countries still adopting a 'zero tolerance' attitude toward Covid, preferring economically costly lockdowns to accepting that the disease will become endemic.
Goldman Sachs (NYSE:GS) downgraded its prediction for China’s economic growth at the weekend, saying it will likely expand 5.2% next year, down from a previous projection of 5.6%.
Back in Europe, Michelin (PA:MICP) will also be in the spotlight after the French tire manufacturer releases its earnings, while the Italian banking sector will be in focus after the Italian government on Sunday ended talks with UniCredit (MI:CRDI) over the rescue of commercial bank Banca Monte dei Paschi di Siena (MI:BMPS).
Germany’s Ifo Institute will also release its October business climate survey.
Crude prices pushed higher Monday, climbing to multi-year highs with global supply remaining tight and demand strong as the economic recovery from Covid-19 continues.
Oil prices have also been bolstered by worries about coal and gas shortages in China, India and Europe, which have spurred fuel-switching to diesel and fuel oil in the limited number of places that that is pracitcal.
By 2:10 AM ET, U.S. crude futures traded 1% higher at $84.58 a barrel, just off the highest level since October 2014, while the Brent contract rose 0.8% to $85.34, just off the October 2018 high.
Additionally, gold futures rose 0.2% to $1,799.50/oz, while EUR/USD traded 0.1% higher at 1.1659.