London stocks kick off May on bright note after upbeat HSBC earnings

HSBC Holdings advanced 4.7% to the top of the FTSE 100 after its first-quarter profit topped expectations as rising interest rates worldwide boosted income and helped it pay its first quarterly dividend since 2019. The broader banks index rose 2.7%, leading sectoral gains.

London's blue-chip FTSE 100 edged higher on Tuesday, boosted by a jump in HSBC shares after the lender's quarterly profit tripled, though overall gains were limited by weakness in energy stocks.

The internationally-focused FTSE 100 rose 0.2% by 0755 GMT, while the mid-caps index was up 0.6%. HSBC Holdings advanced 4.7% to the top of the FTSE 100 after its first-quarter profit topped expectations as rising interest rates worldwide boosted income and helped it pay its first quarterly dividend since 2019.

The broader banks index rose 2.7%, leading sectoral gains. The results come after major U.S. bank JPMorgan Chase's deal to buy assets of troubled regional lender First Republic Bank helped assuage some fears of a banking crisis.

"HSBC's results are reassuring. We haven't got the same problem in the UK that perhaps we have in the U.S., with investors moving money to money market funds trying to benefit from that short-term increase in bond yields," said Giles Coghlan, chief market analyst at HYCM. "Markets are relieved with the First Republic bank situation being sorted out with JPMorgan. So generally there's less and less talk of banking contagion fears and it's generally lifted sentiment."

BP was a laggard, down 5.1% after paring back its share buyback programme. The oil major, however, made a $5 billion profit in the first quarter of 2023 due to strong oil and gas trading. The oil and gas sector lost 2.3%.

With most markets closed on Monday on account of Labour Day, investors have returned to a week of key rate decisions, including from the U.S. Federal Reserve on Wednesday, to assess if interest rates would stay higher for longer. Homebuilders rose 2.8%, after British house prices showed signs of stabilisation in April, as per mortgage lender Nationwide.

Superdry fell 1.3% after the struggling fashion brand said it is in "positive" talks with investors regarding an equity raise of up to 20%.