European equities drift higher after Asian gains

Asian investors struggled to extend Wall Street's lead, with Hong Kong and Shanghai suffering most after another disappointing reading on the Chinese economy. ©AFP

London (AFP) - European equities drifted higher Monday after Asian gains, as investors tracked the latest corporate and geopolitical news.

Markets brushed off weak Chinese data and comments indicating the Federal Reserve is wedded to its anti-inflation rate-hike campaign.

Investors in Europe were "happy to drift higher", Markets.com analyst Neil Wilson told AFP.

He added that sentiment was partly "lifted" by news that the first shipment of Ukrainian grain since the Russian invasion had left the port of Odessa.

Asia-focused lender HSBC provided another boost with a "bullish" outlook, alongside its intention to revert to quarterly shareholder dividends next year.

HSBC shares jumped 7.1 percent to 550.30 pence in the British capital.

London stocks also rose despite expectations that the Bank of England would deliver a bumper 0.50-percentage-point interest rate hike this Thursday to combat rocketing inflation.

"Sharp hikes by the US Federal Reserve and European Central Bank in July make it all the more likely that it will pull the trigger on an outsize rate hike," Wilson noted.

Global central banks are ramping up borrowing costs in an attempt to get a handle on runaway consumer price inflation.

Weak China data

Asian stock markets climbed, regardless of another disappointing reading on the health of the Chinese economy.

The closely watched Purchasing Managers' Index of manufacturing activity shrank in July on the back of weak demand and the strict zero-Covid measures imposed in parts of the country.

While sweeping curbs have eased in major hubs such as Shanghai and Beijing, sporadic lockdowns in other cities and towns have kept businesses and consumers worried with few signs of the policy easing.

The China data sent oil prices sharply lower on revived demand concerns ahead of Wednesday's OPEC scheduled output meeting.

Last week, strong earnings from US titans Amazon and Apple sparked healthy Wall Street gains and eased concerns about the economic impact of surging inflation and rising rates.

That came after investors took Fed chief Jerome Powell's comments Wednesday to indicate the US central bank could start slowing down its monetary tightening, providing a much-needed boost to stocks.