European stocks open higher as basic resources lead gains; HSBC up 2.5%

European stock markets edged higher Monday morning as investors reacted to key economic data and digested earnings reports.

The pan-European Stoxx 600 was 0.3 percent higher during mid-morning deals with sectors and major bourses in positive territory.

Basic resources stocks – with their heavy exposure to China – were the best performing on Monday, up by more than 1.4 percent. Chinese stocks surged on Monday after several leading companies forecast strong mid-year earnings and economic data showed growth. Mining giants BHP Billiton, Rio Tinto and Anglo American were all trading around 2 percent higher.

Europe’s banking stocks also moved higher on Monday amid better-than-expected earnings. HSBC, Europe’s largest bank, reported a set of financial results that beat estimates in the first half of 2017 and announced a $2 billion share buyback on the back of a growing capital base. Its shares surged towards the top of the benchmark, up over 2.5 percent.

French firm Carrefour slumped towards the bottom of the Stoxx 600 during mid-morning deals after Deutsche Bank cut its rating on the stock to “sell” from “hold”. Its shares were over 1.3 percent lower on the news.

Euro zone core inflation up 1.3%

Euro zone inflation held steady in July although its core measure, a figure closely watched by the European Central Bank, edged up to a four-year high on Monday. Eurostat reported core inflation went up to 1.3 percent from 1.2 percent in June, contrary to market expectations of a slight drop to 1.1 percent.

Meantime, investors remained wary of geopolitical uncertainty on Monday after North Korea conducted another missile test late on Friday. Pyongyang said it had proved its ability to strike the U.S. mainland, prompting Washington to respond by flying two bombers over the Korean peninsula on Sunday.

Elsewhere, EU member states – excluding the U.K. – will have until the end of the day to submit bids for hosting the European Medicines Agency (EMA) and the European Banking Authority (EBA). The EMA and EBA headquarters – currently both based in London – will have to move away from the U.K. in the wake of Brexit, which is due to take effect by the end of March 2019.

Sticking with the U.K., a four-day strike is set to begin at the Bank of England on Monday. Staff working in the parlors, maintenance and security departments at Britain’s central bank are poised to walkout in protest over a 1 percent pay rise.

Source: CNBC