HSBC has posted first-half figures this morning, and with profits down by 12% year-on-year the mis-selling of PPI is still an issue. UK banks have now added over £23 billion back to UK bank account holders over the last five years, arguably providing their own quantitative easing on behalf of the Bank of England.
Although the FTSE and its European counterparts are up on the day, worries still persist due to the weekend’s multi-billion euro bailout of Portuguese Banco Espírito Santo. The speed with which the Portuguese government has acted encourages belief that this will not be the first of many dominoes, but it is disappointing that a European government has once again been called into action. With results of the European bank stress tests due out later in the year, it does raise the question of what other banks will require funding, either pre-emptively or on a forced basis.
Friday’s slightly disappointing non-farm figures might have given US equities a wobble, but broadly bullish Asian markets and a positive outlook on the US equity index futures for today emphasise that any disillusionment has been short-lived. The US reporting season is beginning to wind down with only a few highlights still to come, one such gem being American International Group due to report after the markets close today.
Ahead of the open we expect the Dow Jones to start 35 points higher at 16,528.