London pre-open: Stocks set to dip, poor China PMIs drag

(Sharecast News) - London's top-flight index is being called to start the session slightly lower following the release of weaker than expected readings for key factory Chinese factory sector surveys overnight. As of 0756 BST, futures on the FTSE 100 were dipping 11.0 points to 7,366.50.

Investors were also digesting the best performance in European and US markets in July since November 2020 with some analysts expressing caution.

"The questions being asked now are about the degree of rate rises, and then how quickly rates start to come down again. The answer to that could take a few more months to unfold, but it has raised the question as to whether the current bear market is over?," said Michael Hewson, chief market analyst at CMC Markets UK.

"Based on the current price action the answer to that seems to be somewhat premature, given that there is little in the price action so far to support that prognosis."

Overnight, survey compiler Caixin reported a decline in its China Purchasing Managers' Index for manufacturing covering the month of July.

The index fell from a reading of 51.7 for June to 50.4 for July (consensus: 51.5), mirroring the drop seen in the 'official' PMI that was released at the weekend.

"This marks the start of the H2 weakness we expected, as the data normalises after waves of disruption tied to the Omicron wave and related restrictions," said Craig Botham, China+ economist at Pantheon Macroeconomics.

Still on the economic calendar for later, at 0930 BST S&P Global was scheduled to release a final reading on its UK factory PMI for July (consensus: 52.2) with a rival euro area gauge due out at 0900 BST and the US ISM Institute's own manufacturing PMI set for release at 1500 BST.

Pearson delivers solid results, HSBC to resume quarterly dividends

Publishing company Pearson said on Monday that it had delivered a "strong financial performance" in the six months ended 30 June, leading the group to reiterate guidance for the full year. Pearson said underlying sales had grown 6% to £1.78bn during the first half of the year, while adjusted operating profits surged £33.0m to £160.0m, principally driven by an "encouraging" trading performance, FX benefits and property savings.

HSBC reported a fall in first-half profits on Monday but pledged to resume quarterly dividends next year as its annual outlook remained positive. The banking giant posted a pre-tax profit of $9.17bn, down more than 15% year-on-year, despite reporting a modest 2% uptick in interim revenues to $12.8bn.

Food producer Cranswick said on Monday that revenues had grown 7.6% year-on-year in the 13 weeks ended 25 June. Cranswick said like-for-like revenues were 5.8% higher, with strong growth in its core UK market partly offset by expected lower export revenue. Far East export sales were lower than in the same quarter a year earlier due to market prices falling from elevated levels experienced over the previous two years.