London pre-open: Stocks seen up after long weekend

(Sharecast News) - London stocks were set to edge higher at the open on Tuesday as investors mull news of JPMorgan's takeover of First Republic and results from the likes of HSBC and BP, as well as a surprise interest rate hike in Australia. The FTSE 100 was called to open 14 points higher at 7,884.

CMC Markets analyst Michael Hewson said that with JPMorgan Chase stepping in "to lance the boil" of First Republic Bank over the weekend, recent regional bank results from last week are raising confidence that this bout of banking uncertainty could well be in the rear-view mirror.

"After finishing the month of April strongly, European markets look set to open the month of May slightly higher, after US markets finished a quiet session more or less unchanged," he said.

"In Asia trading the RBA surprised markets this morning by unexpectedly raising rates by 25bps to 3.85%, despite recent sharp falls in the headline rate of inflation.

"The Australian central bank has come under heavy criticism in the past few weeks for its failure to spot that inflation had run ahead of expectations, and today's unexpected pivot could be because of that.

"The tone of the statement was also more hawkish, saying that more tightening could be required if inflation continues to remain above target, with the central bank saying that services inflation was worryingly sticky."

In corporate news, HSBC reinstated its dividend and announced a new round of share buybacks as it trebled first-quarter profits on the back of rising interest rates.

The bank posted a pre-tax profit of $13bn for the three months to March against $4.2bn a year earlier and the $8.64bn average company-compiled analysts' estimates.

It was also boosted by a reversal of a $2bn impairment HSBC took against the planned sale of its French business, reflecting the fact that the deal may no longer go through.

A 10 cent-per-share payout was declared, the first quarterly dividend since 2019 and the lender also flagged the first of a new cycle of buybacks of up to $2bn.

"With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buybacks," CEO Noel Quinn said in the results statement.

HSBC also credited a provisional gain of $1.5bn on its £1 acquisition of Silicon Valley Bank UK in March when its US parent collapsed.