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London open: markets gain after positive HSBC results

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UK markets started the new week on a positive note, helped by some well-received quarterly results from London-listed banking giant HSBC as well as improving data from China.

Shares in HSBC, the FTSE 100’s largest stock by market capitalisation, edged higher early on after delivering a 10% jump in underlying profits in the third quarter.

Meanwhile, activity in China’s services sector in October expanded at its fastest pace in the last year, reinforcing confidence that the world’s largest economy is on a stable growth path.

The non-manufacturing purchasing managers’ index (PMI) rose from 55.4 to 56.3 in last month, according to data reported by National Bureau of Statistics (NBS) and China Federation of Logistics and Purchasing (CFLP). This following last Friday’s NBS report that showed that the manufacturing PMI hit an 18-month high in October.

“Given the efforts of the Chinese government to steer the economy away from the export-led model to one focused more on services, this data is increasingly important, and very encouraging,” said Market Analyst Craig Erlam from Alpari.

“If the services sector can pick up more and more of the slack here, it will go a long way to preventing a hard landing, which many fear could happen, while allowing the government to address its growing debt,” he said.

HSBC gained this morning after saying that underlying profit before tax totalled $5.06bn in the three months to September 30th, up 10% from $4.6bn the year before. Underlying revenues however were broadly unchanged at $15.6bn.

Mining stocks were also on the rise this morning, buoyed by the upbeat outlook for top metals consumer China. Antofagasta, Rio Tinto, Anglo American and BHP Billiton were among the best performers.

Heading the other way was Weir Group after the engineering firm cut its full-year profit outlook due to the impact of the recent weakness in the US and Australian dollar.

Ryanair also surprised the market with a profit warning today, saying that full-year profits will fall for the first time in five years as airfares drop in Europe due to fierce competition. Sector peers easyJet and IAG were also out of favour this morning.

Utility peers SSE and Centrica were trading lower after analysts at Investec downgraded their ratings on the stocks to ‘reduce’ and ‘add’, respectively.

Source: ShareCast