Week kicks off with a European rally

Strong earnings from banks and positive company news boosted European markets helping them to shrug of the gloom emanating from Asia. The DAX was higher but lagged behind the FTSE’s 0.84% rally after Angela Merkel’s government suffered a loss in a regional election over the weekend. The deadline for the US sanctions against Iran are now just around the corner but Brent crude and WTI both fell in early trading as the markets are now pricing in the strong possibility that three of Iran’s biggest buyers will continue their imports from the oil-rich country despite the US restrictions.

This century’s least reliable budget

The UK Chancellor Philip Hammond is expected to announce a cautious loosening of public spending as he delivers his last pre-Brexit budget Monday afternoon. The government has promised a £20 billion a year boost for the NHS over the next five years and Hammond is expected to clarify where the funding will come from, possibly by cutting tax breaks on pension savings, looking at the defence budget or getting tougher chasing tax payments from tech giants operating in the UK. But traders will take his words with a degree of caution, aware that a non-deal Brexit would force him to tear up his plans and start operating from an emergency sheet. The currency markets were surprisingly placid ahead of Hammond’s speech at 3.30pm UK time with the pound almost unchanged against the euro and notching higher against the dollar. The budget is also likely to overshadow the latest UK mortgage data due after the market closes and expected to show that the UK housing market is continuing to decline in the run-up to Brexit.

HSBC’s 16% increase in profit

HSBC’s shares powered 4.25% higher after the company turned in a remarkable 28% increase in pre-tax profits over a revenue rise of over 6.3%. The bank managed to boost both its retail banking and wealth management operations producing earnings on a par with Barclays but much stronger than the Royal Bank of Scotland and in a different league from Lloyds. The Asia-focused lender made positive forecasts for the year ahead and said it plans to continue spending on growth with $17 billion earmarked for investing in technology and in China.