Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Two heavyweight companies, HSBC and BP, have beaten profit forecasts this morning as the global economic outlook brightens.
Banking giant HSBC posted a 79% rise in pre-tax profit of $5.78bn (£4.1bn) for the first quarter of 2021, up from $3.21bn a year ago and well ahead of forecasts.
All regions were profitable in the quarter, notably HSBC UK Bank, which reported pre-tax profits of over $1.0bn in the quarter.
HSBC says that while it faces “interest rate headwinds” (ie, borrowing costs at record lows), expected credit losses and other credit impairment charges (‘ECL’) fell.
CEO Noel Quinn says the economic outlook has ‘improved’, more than a year after the pandemic began.
“We had a good start to the year in support of our customers, while achieving materially enhanced returns for our shareholders. I am pleased with our revenue and cost performance, but particularly with our significantly lower expected credit losses.
Global Banking and Markets had a good quarter, and we saw solid business growth in strategic areas, including Asia Wealth and trade finance, and mortgages in Hong Kong and the UK. We also strengthened our lending pipelines in our retail and wholesale businesses.
Quinn added that its growth and transformation plans is proceeding well:
The economic outlook has improved, although uncertainties remain. We carry good momentum into the second quarter, while maintaining conservative positions on capital, funding, liquidity and credit.”
In another sign that conditions are improving, the bank released $400m of provisions that it had set aside for bad debts racked up during the pandemic, “particularly in the UK”, reflecting improved economic forecasts.
BP has also swelled its earnings over the last quarter, thanks to significantly higher oil prices and bumper revenue from natural gas trading.
Profits jumped to $3.325bn (£2.4bn) on an replacement cost (RC) basis, up from a loss of $628m in the first quarter of 2020 at the start of the pandemic, and a profit of $825m in Q4 2020.
On an underlying RC basis, first-quarter profits more than tripled year-on-year, to $2.6bn.
BP says it is also commencing share buybacks in the second quarter, having hit its net reduction targets early after a ‘strong quarter’.
But although the global economic picture is brightening, the terrible scenes in India show that the pandemic is far from over. With cases at record levels, thousands are dying each day and India’s hospital system is being overwhelmed.
Also coming up today
Investors are digesting Tesla’s Q1 results released last night, which saw the electric carmaker post record profits of $438m (£315m), a new record, and also beat revenus forecasts.
It also reported a $101m “positive impact” on profitability from bitcoin, having invested $1.5bn in the cryptocurrency earlier this year, and subsequently sold $272m worth.
But, Tesla’s shares dipped in afterhours trading, on concerns that rising supply chain costs and lower average selling prices were hitting profit margins.
European stock markets are expected to open flattish, after the S&P 500 and the Nasdaq closed at record highs last night.
Commodities are still hot – with copper hitting a 10-year high on Monday.
- 8.30am BST: Swedish Riksbank interest rate decision
- 9am BST: Italian business confidence for April
- 11am BST: CBI distributive trades survey of UK retail
- 2pm BST: US house price index for February
- 3pm BST: US consumer confidence for April