Good morning! Here’s what you need to know in markets on Wednesday.
HSBC said Wednesday profit before tax plunged 29% in the first half of 2016 to $9.7 billion (£7.2 billion), after “exceptional volatility” during a turbulent six months ending in Britain’s decision to leave the EU. Group chairman Douglas Flint said Brexit had “not been anticipated” but insisted that the bank had come through the period “securely.”
China’s services sector, now the largest part of the economy, is slowing. The latest Caxin-Markit services purchasing managers’ index (PMI) fell by one point to 51.7 in July, indicating that growth in the sector slowed modestly compared to levels seen in June.
It’s European PMI day. The latest Markit figures for growth or contraction in the service sector and wider economy in July are due from 8.15 a.m. GMT (3.15 a.m.) onwards. We’ll get readings for Spain, Italy, France, Germany, the UK, and the Eurozone. The UK’s service sector is expected to shrink at the same pace as in June, 47.4. (Any number above 50 signals growth while below means contraction.)
Societe Generale, France’s second-largest bank, said second-quarter profit rose 8% on lower provisions for bad loans and a gain on the sale of its stake in Visa Europe. Bloomberg reports that net income rose to €1.46 billion (£1.2 billion, $1.6 billion) from €1.35 billion in the same period a year earlier. That beat the €1.36 billion average estimate of six analysts compiled by Bloomberg. Societe Generale booked a €725 million gain from the sale of its stake in Visa Europe, more than offsetting a €200 million provision for legal risks.
Santander UK has submitted an offer to buy Williams & Glyn from Royal Bank of Scotland, in a move which could end RBS’s suffering as it tries to carve out the new lender. The Telegraph reports that RBS was ordered to set up the new bank by the European Commission under the terms of the 2008 bailout but the processed has proved expensive, difficult, and complicated.
Biogen, the $75 billion (£56.3 billion) US biotech giant, surged on Tuesday after a report that it had received takeover interest. The Wall Street Journal on Tuesday reported that Merck and Allergan have each informally expressed interest in doing a deal.
Japan’s Cabinet officially approved an economic stimulus package worth over ¥28 trillion (£206.5 billion, $275 billion) on Tuesday. This is the latest move by Prime Minister Shinzo Abe to kick-start Japan’s economy.
Japanese stocks are under pressure as the yen strengthens on stimulus plans. The benchmark Nikkei stock index is down 1.66% at the time of writing (6.20 a.m. GMT/1.20 a.m. ET). The Hong Kong Hang Seng is down 1.67% and China’s flagship Shanghai Composite is up 0.20%.
Bitcoin prices plunged 20% after one of the digital currency’s largest exchanges said it had been hacked and bitcoins had been stolen. The Financial Times reports that Hong Kong-based Bitfinex announced the security breach and froze all customer accounts late on Tuesday. Bitfinex is the largest dollar-based exchange and third-largest globally behind OKCoin and BTC China, both of which are based in renminbi.
Digital Asset Holdings, the buzzy blockchain startup run by former JPMorgan executive Blythe Masters, has assembled a dream team of new hires. The firm is building out its senior team with eight high-profile hires spread across New York, London, and Frankfurt.
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