Raises its return guidance. Heineken brews a profit with the dutch beermaker hiking dividends, but warning of an uncertain outlook. The kind of pricing we are taking are, you know, incidental we want to be cautious in the near term. Demand weakness hits chinas Manufacturing Sector as factory shrinks in july. Good morning happy monday to everybody watching the show. We are getting the final pmi numbers for the month of july. We had them at the single country level in the last half hour now the aggregate number at 49. 8 versus 49. 62 a significant decline from where we were back in june at 52. 1 this is at a eurozone level, but on an individual level, declines in each country. Germany and france mainly leading the declines in manufacturing. Notably to point out we are now below that 50 level which typically indicates contracting territory and one signal for a declining Economic Activity in the coming months. The pmi manufacturing numbers coming in slightly lower than the flash reads. We are starting off august with a positive tone. All of the indi all of the indices in the green. The bank of england on thursday hiking which would be the highest in 25 years. Germany up. 40 fairly focused on the Economic Data coming in the pmi numbers we spoke about were disappointing a lot of that is depending on what happens with the european gas imports coming from russia cac up. 30 . Eye t italian index up as well as for the u. S. Markets. We have all of the three majors pointing to a negative open. This coming off after strong month of july with s p up 7 Percentage Points. Nasdaq up 12 Percentage Points we had a lot to digest which is why we are moving negatively. It is the first of the month and we go and take a look back at the indices in the prior month. Lets get to it. Stoxx 600 in europe. For the month of july up 7. 6 . Really strong rally as far as july is concerned. The first half of the year was negative for the most part a lot of concerns on recession fears and monetary tightening. That changed in july we did see a cyclical bounce this is individual index performance. To ftse 100 up in july. Very strong month for the french index. Cac up 9Percentage Points. The ftse 100 was the best in europe it is commodities focused. It did well in the first half of the year ftse 100 out performed that turned in july and became a relative under performer this is the picture for the indices in the month of july in the u. S. The dow up 5. 6 . Nasdaq, that tech heavy index, up 11 the tech stocks hit in the first half of the year with growth concerns and higher Interest Rates which when you bet are growth, you are discounting higher Interest Rate to hit the tech stocks. July was a good recovery month lets switch over with the greenback. The theme of the year has been one of Dollar Strength the dollar was interesting up until the middle of the month or the first ten trading days of the month, we continued with the upward trend all of a sudden, things declined for the month as a whole, the dollar was up 1 percentage point. The last few weeks, we started softer some people are saying we may have reached peek u. S. Dollar. We will get into the show with the next guest coming up as for the dollar, it was an exciting month we almost broke through parity we rebounded back up to 1. 02 for the whole for the month, euro down 2. 5 Percentage Points. We got close mark. Of course, there is more bullishness priced in. One reason the euro bounced. I want to take a look at fixed income yields. U. S. Treasuries. You can see that right at the beginning of the month, we got as high as 3. 5 we dropped quite a lot since then down to 2. 7. That does seem a little 40 basis points or so this was the best month for the u. S. Treasury since march of 2020 quite a stellar performance for u. S. Fixed income. In the month where the fed hiked 75 basis points. That tells you about Interest Rate expectation and moving to the italian spread and tenyear space we saw a lot of volatility italian politics coming to the floor with the resignation with Prime Minister mario draghi and new elections on september 25th. This is playing into the spread with the two it is not obvious here essentially we saw a big wi widening for the month thats what is going on there in fixed income i want to bring in the first guess with ing great to have you with us. So much to talk about with you i want to start off with the dollar that seems to be the focus of the first half of the year which the dollar was on a tear things are beginning to change we have seen a softening of the dollar compared to the yen where do you see the greenback going from here . I think high probability we are close to the peak in the dollar this neotion has become more dev relevant in the market i think from now on, we need to differentiate how currencies will perform against the dollar. In a way, we are expecting the dollar to reach its peak and start depreciating a bit we dont expect it to be a fast depreciation we dont expect it to be across the board. There will be some currencies that will be able to out perform the dollar for example, as you were mentioning which is looking at lower yields globally and that is a bullish factor for the yen, we are looking at all currencies the Canadian Dollar and from the rebound and you look at Euro Currency and the swedish corona. I will get into more detail i want to go back to dollar yen. We know it was a huge risk off environment. That changed in july as i have been recapping with individual equity performance where do you see the dollar yen go from here will it break to the down side possibly it will break below 1. 30 we are expecting 1. 30 to be tested within the next couple weeks. The reason for that is relating to a call yield decline. Rate Strategy Team is bullish on bonds at the moment. We expect u. S. Yields to continue dropping and that is a pos positive for the yen we expect this to continue supporting the yen for now we think levels between 125 and 130 could be the range heading into september i want to turn to europe now. We had the eurozone gdp numbers come out on friday they came out better than people feared particularly led by france, italy and spain with the tourism effect not the case for germany are we in a situation where things europe are not as bad as people had been worrying about the problem with the eurozone is the big tail risk coming from the gas supply story and i think in a way if you look at e euro euro dollar, it is trading below value. And looking at the gas shutdown from russia which is a tangible ri ri risk even if it was supportive of the sentiment, it is not enough to mitigate the concerns of the markets which are reasonable and that boils down to the the eu and russia supply. Euro has been supported around par we briefly touched it. We rebounded straightaway. There weas some really strong support. What is going on there do you expect us to breakthrough to the down side as well yeah. It was probably about party. This is true if you look at the one month performance against the dollar, the euro is the only currency that can climb and appreciate against the dollar i think you can say were not at levels we dont have enough down side risk to the eurozone trading below parity at the moment although the risk to the sound side which is tangible at the same time, we think markets are still reluctant to jump back into long euro dollar positions especially because of those down side risks from external factors in geopolitics. When i looked at the markets in july, we looked at the difference in the spread with the bond market. To what extent do you think Political Risk fragmentation risk will be a key deciding factor for the euro goes here versus traditional Monetary Policy and Interest Rate hikes i think it will become more relevant especially in september. The 25th of september with the election in italy. I think markets are holding a bit of an optimistic approach. They have comforted by news of the french and calls in italy that they will respect eu budget rules. At the same time, we will see how they react with the elections. That could be toward the end of september which could spread and widening which could put a lid on the euro. And we have a big week coming up in the uk bank of england may go for the 50 basis point hike. What does that do to the pound ser versus the dollar and euro as well i think 50 basis points are now in the price what will matter is how markets see future rate hikes with the bank of england. Excluding something from the fed and eu did switching to a meeting by meeting and fully data dependent approach we dont expect too much volatility for the pound we think it will be up to the upcoming data where the pound will go. When it comes to cable, we could see a return to 120 or 121 for now with the dollar regaining momentum the week after. It euro sterling, 84 is the line in the coming weeks. Excellent thank you for those targets. We will watch that closely strategist from ing. And turning to earnings. Hsbc lifted the profitability target after the first half earnings beat. The lender returned the rate on target at least from 12 from next year. Profit fell in the first half, but still came in better than expected emily filed this report. Reporter hsbc filed a profit across the first half. 9. 2 billion down 15 on year. For the Second Quarter, pretax profit coming in at 5 billion which is better than expected. Revenue in the Second Quarter up 2 to 12. 8 billion. Margin of 1. 35 . Return on average of 9. 8 . The common equity tier 1 is 13. 6 . They approved a dividend of 9 cents per share. They expect a payout ratio of 50 for 2023 and 2024. Hsbc will resume paying quarterly dividends in 2023 to return to precovid levels as soon as possible share buybacks are unlikely in 2022 after anthe 1 billion buyback. Hsbc exiting businesses in the west and reallocating that capital to areas of growth in asia and the middle east it is on track to complete the sale of the french Retail Business next year it is a more International Business with strong domestic franchises in hong kong and the uk they will meet with investors tomorrow with the first meeting in three years since covid the bank defended itself with the calling on the exploration of options like spinning off the asian business to unlike greater shareholder value. That move would make it less effective. Since april, the proposal has gained backing from investors. Disgruntled after the meeting canceled in 2020 reporting in hong kong, im emily tan. Hsbc is up today. One of the top three stocks in the stoxx 600. Heineken with a 23. 3 jump in first half profit boosted by growth of beer volume. The dutch brewer maintained gui guidance speaking to cnbc, the ceo explained why we was cautious on the guidance so far consumers are resilient as volumes are testimonial, but the pricing we are taking with orders is unprec unprecedented. We will be cautious in the near term and that is the outlook as we shared it and pearson with profits growing in the first half. The structure is bearing soft savings results. Up 6. 7 points today the ceo said the company results. We are seeing a new normal in terms of life lopg learning. I mentioned assessment to the qualification business that is certifications that are coming through particularly in the i. T. And tech area that we do on behalf of google and microsoft to name a few. We acquired a company which is a credentialing company. They are acting about 50,000 new certifications a week. That is a scale in terms of the past with Higher Education was defined by university and college. Going forward, we are seeing more and more furthering their education while working. That is a trend that is here to stay. And german chemical cut the forecast for the year amid the surging costs. Evita is between 1. 7 to 2. 2 billion euro that is below analyst ex expec expectation. And coming up on street signs. China struggles as covid waves continue well have more on that in a few moments. Well be right back. heartbeats introducing icy hot pro. Ice works fast. To freeze your pain and your doubt. Heat makes it last. So youll never sit this one out. New icy hot pro with 2 maxstrength pain relievers. Welcome back to street signs. Chinese manufacturing output contracts in july as covid lockdowns weighed on demand. A separate survey showed factory slo slowing. We have seen cuts in demand and output from the numbers. Lets look at how the picture is for the key minors with the Strong Association to how chinese Economic Activity is playing out. The picture is muted today you have a lot of the names like glencore here you can see a mixed fortune here with infineon down. 20 ams is closed with the holiday in switzerland asml is up a bit a mixed bag with the chip makers demand in china is the driver for the auto outlook. The picture is mixed mostly positive for the french names like renault and stellantis our colleague filed this report about the numbers. All right. We will bring that to you in a short while. Just to reiterate the numbers from china are having reverb rations. People are beginning to look at growth for the second half of the year particularly as chinas largest economy is still undergoing a covid lockdown. Zero policy covid. A marginal reopening, but some of the issues with respect to supply chain and logistics and with overall demand are still beginning to plague the economy. You can see overnight positive reaction in markets. Shanghai up 2 shenzhen is up almost 1 the economic picture is south for the second half of the year. Speaking of china, House Speaker nancy pelosi will visit south korea and japan. There is not ovfficial visit to ta taiwan any advice it visit would be frowned about to taiwan. Reporter xi jinping warned President Biden about the u. S. Meddling in the territory. With chinese officials communicating, those who play with fire will perrish by it a source close to the speaker, tells nbc news the stop is considered tentative i dont talk about my travel because it is a security issue reporter if pelosi visits, she is the first to touch down in taiwan since 1997 when Newt Gingrich visited beijing flexing its military might with drills in the South China Sea over the weekend the uss Ronald Reagan ready to respond. The u. S. Looking to talk about covid and Climate Change the Biden Administration has been clear that u. S. Policy has not changed. The United States strongly opposes any unilateral efforts to change the status quo or undermine stability across the strait. Coming up, all the late evi st on the u. S. And ukraine grain deal as the first shipment leaves odesa do you have a Life Insurance policy you no longer need . Now you can sell your policy even a term policy for an immediate cash payment. We thought we had planned carefully for our retirement. But we quickly realized we needed a way to supplement our income. If you have 100,000 or more of Life Insurance, you may qualify to sell your policy. Dont cancel or let your policy lapse without finding out what its worth. Visit coventrydirect. Com to find out if your policy qualifies. Or call the number on your screen. Coventry direct, redefining insurance. Good morning welcome to street signs. Im Joumanna Bercetche these are the headlines. Struggling off the pmi data with factory shrinking in the biggest economies. Hsbc shares jumped to the top of the stoxx 600 as investors dismiss a 15 jump in the first half and raises the guidance. Heineken with a 22 rise of net profit with the dutch beermaker hiking the dividend, but warning of the outlook the ceo talks about the inflation strategy. The orders are unprecedented. We want to be cautious and v vigilant. And the first shipment from ukraine bound for lebanon under a deal brokered by turkey. Getting more final pmi numbers for the month of july. This time for the uk it has come in for 52. 1. That is lower than the fl flash estimate of 52. 2 the pmi manufacturing members in the uk showing decline from where we were last month, but not a significant drop from eurozone this is the picture for the pound today. Trading at 122. 30 firmer. Of course, because there is not much difference, we are not seeing a lot of movement now it does show that the Manufacturing Sector in the uk held up well versus the eurozone lets talk more about european markets as a hole. Ftse 100 up. 50 big week with the bank of england meeting on thursday. Xetra dax up. 30 . We have more results coming through today. Slightly weaker on the dax cac up. 40 . Strong from the automakers with renault up 2 points today. Ftse mib up. 90 for the first trading day of august. As for oil, lets look at the oil picture. Trading at 96 weaker on the session. Brent up 102. 70. The theme is one of the china pmi numbers coming through indicating we may be in for a turn in growth and demand of oil in the second half of the year remember, the oil market is a push and pull with what is on the demand side and output side with opec plus meeting this week that something to watch. Starting today, eu Member States are beginning voluntary reduction of natural gas demand of 15 the block is beginning the move ahead of winter. Some Member States will be able to apply for exemption if they are not connected to other country gas networks this is including ireland and malta and cyprus some companies are moving to disht hodifferent hours. Some supermarkets will preserve electricity. Earlier this month, president macron is looking to help save energy ahead of winter. Russia cut off gas supplies to latvia accusing them of violating supply conditions. The latvian gover