FTSE 100 Gains, Led by HSBC and Pearson-II

0823 GMT — HSBC Holdings had a strong second quarter, which should mean a material upgrade to consensus forecasts for this year and beyond, says Gary Greenwood, analyst at Shore Capital. However, the FTSE 100 lender faces uncertainty as its largest shareholder Ping An continues to propose a breakup of the group amid rising geopolitical risk. Still, HSBC could see shares rise to 700 pence, assuming a sustainable return on tangible equity of 12%, says Greenwood. Shor has recommended a hold on the stock and a target price of 514 pence. ([email protected]; @sabelaojeaguix)

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Sterling gains ahead of expected rate hike

0735 GMT – Sterling rises as investors more aggressively raise interest rates on the Bank of England at its next meeting in the week. “The BoE’s decision on Thursday will be a major event with our UK economists and 50 basis points expected by consensus [interest rate rise]That would take the bank rate to 1.75% and become the biggest single increase since 1995,” Deutsche Bank analysts said in a note. This will likely be accompanied by economic forecasts that support the case for further rate hikes, They say GBP/USD rose 0.1% to 1.2191 and EUR/GBP fell 0.1% to 0.8393. ([email protected])

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Liz Truss seen as next UK PM, fiscal boost expected

0659 GMT – After attracting a string of high-profile endorsements, City hopes Liz Truss will be the UK’s next prime minister. This would mean a net fiscal boost of GBP40 billion over the coming 12 months, Citi’s Benjamin Navarro says in a note. Citi expects to add 0.8% to GDP levels by the end of 2023 and 0.4 percentage points to core inflation by 2024. Inflation risks are on the upside, with the UK potentially linking much higher inflation and supply challenges with further demand. Support, Navarro says. According to Citi, the fiscal package of the truce will increase policy by at least 50 basis points in the coming six months. ([email protected])

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Pearson’s strong 1H shows how the diversified portfolio is addressing concerns

0656 GMT – Pearson delivered a strong beat in the first half and showed how concerns over the higher education and online program management units are being offset by strength elsewhere in the portfolio, Citi analysts said in a research note. The FTSE 100 education company also said that at least GBP100 million more cost efficiencies that will be delivered in 2023 and this should allay any concerns about the outlook, they note. “Nevertheless we see that Pearson’s 1H results are undercutting short- and medium-term forecasts and, we think, the results in particular would be well-taken to concerns about pressure on ongoing Higher Ed enrollment.” ,” he says. Citi has a buy rating on the stock with a target price of 1,000 pence. ([email protected])

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HSBC to expedite 2Q consensus upgrade

0602 GMT – HSBC’s earnings for the second quarter of 2022 were better than expected and pretax profit for 2023 should be at least 10% above the consensus, Jefferies says. With a solid set of results, guidance on net interest income and cost of FTSE 100 listed lenders is price-sensitive in the lender’s release, says US Bank. Jefferies has a hold recommendation on the stock and a target price of 574.00 pence. ([email protected]; @sabelaojeaguix)

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(END) Dow Jones Newswires

Aug 01, 2022 05:49 ET (09:49 GMT)

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