US stocks are off to a positive starts, extending equity market gains across Asia and Europe.

• S&P 500: up 0.49%
• Nasdaq: up 0.74%
• Dow: up 0.4%

HSBC has ended up in hot water over the Hong Kong protests.

The UK bank has reportedly been forced to close branches and suspend some ATMs across the region, after being targeted for shutting an account used to raise funds for demonstrators.

The FT (£) reports:

Ten of its branches were shut after undercover police carried out violent arrests of protesters who had turned their ire on HSBC following accusations it helped the police close an account held by Spark Alliance fund, a crowdsourcing operation.

The attacks on HSBC extended to the iconic bronze lions outside the bank’s Queen’s Road Central headquarters, which still bear bullet marks from fighting during the second world war when the territory fell to Japan in 1941. Their eyes were smeared with red paint, their crevices stuffed with pamphlets and one was lit on fire on Wednesday night.

The bank has tried to stay neutral throughout the unrest, though in August took out a full-page advertisement in local newspapers calling for a peaceful resolution to the standoff.

The pound has extended its fall and is now down 0.6% at $1.317 against the US dollar.

Versus the euro, sterling is down 0.36% at 1.177.

Growing numbers of business leaders in the UK believe Brexit uncertainty will take longer to resolve than Boris Johnson pledged before the election, according to a Bank of England survey.

In a reflection of the challenges the government faces in striking a trade deal with the EU before the end of the year, Threadneedle Street said the date at which firms expected the issue to be clarified had been pushed further into the future.

According to the central bank’s decision maker panel, which surveys almost 3,000 chief financial officers from small, medium and large UK firms, as many as 42% said they thought the lack of clarity over Brexit their business face would not lift until at least 2021, up from 34% in November.

The findings come as factory output across the UK plunged in December at the fastest rate in almost seven-and-a-half years, according to a separate survey. Both Brexit uncertainty and a wider manufacturing downturn around the world weighed on businesses.

Read the full story here:

European banking stocks rose to their highest level since May 2019 earlier in the session, when the Stoxx 600 Banking Index rose 2.2%.

Gains have eased slightly, but the index is still up 1.8%.

It is a bit of a relief rally, as investors are expecting capital requirements - how much banks need to set aside to offset risky assets and create a cushion for a downturn – to stabilise after years of increases, Bloomberg (£) reports.

Bloomberg reports:

After the 2008 financial crisis, regulators around the world forced banks to hold more capital to absorb losses without having to ask taxpayers for a bailout. That made banks stronger, but it also hurt investors because the lenders retained more profit to strengthen their reserves rather than rewarding shareholders.

Now, banks including UniCredit say they’re in a position to increase dividends and buy back shares. While others are struggling to increase profit in the face of negative interest rates and international trade disputes, their financial strength is also improving and they may follow the Italian lender.

Greggs is riding the Veganuary wave, which has sent shares up 1.9% and put it among the top 25 stocks on the FTSE 250.

Today marks the launch of Gregg’s vegan steak bake, which hit shelves just in time for Veganuary – a growing movement that encourages people to embrace plant-based diets during January.

Fans reportedly queued up for the meat-free version of its popular steak bake behind velvet ropes in Newcastle, where two night club-style bouncers were on duty and a DJ was spinning tracks inside.

The first 200 customers even got to enjoy their steak bake in limited edition packaging and displays reminiscent of the high-profile iPhone launches.

It comes a year after the launch of Greggs meatless sausage role, which is reponsible for fuelling an 80% jump in its share price in 2019.

Costing from £1.55, the bake is made from fungi-based protein Quorn instead of beef, mixed with diced onions and meat-free gravy.

It has gone on sale in 1,300 shops today, and will be rolled out to the remaining 700 outlets on 16 January.

KFC has also launched its vegan chicken burger nationwide today.

You can read more about the hyped steak bake here:

The FTSE 100 has nearly doubled its gains since the market open and is now trading higher by 0.98%.

Gains are being led by Pearson and miners Glencore and Antofagasta, as well as Barclays which is up 3%.

The pound has lost further ground against the US dollar, falling -0.4%.

It is also down -0.2% against the euro.

The decline has been chalked up to Brexit jitters ahead of the end-January Brexit date, and profit-taking on the bounce in sterling last month.

While relations between Washington and Beijing have improved (at least enough to solidify phase one of a US-China trade deal), China seems to be cooling on Britain.

Reuters reports that China has temporarily blocked a planned cross-border listing between the Shanghai and London stock exchanges due to political tensions with the UK. They centre around Britain’s stance over the Hong Kong protests.

Reuters reports:

Suspending the Shanghai-London Stock Connect scheme casts a shadow over the future of a project meant to build ties between Britain and China, help Chinese firms expand their investor base and give mainland investors access to UK-listed companies.

The sources, who include public officials and people working on potential Shanghai-London deals, all said that politics was behind the suspension.

Two of them highlighted Britain’s stance over the Hong Kong protests and one pointed to remarks over the detention of a now former staff member at its consulate in Hong Kong.

A reminder that the M&G property fund was suspended in early December following “unusually high and sustained outflows” – namely, investors demanding their money back – due to Brexit-related political uncertainty and the retail downturn that’s been hitting Britain’s high streets.

It’s not clear which other properties are on the chopping block as M&G tries to raise enough cash to re-open the fund. But my colleague Julia Kollewe rounded up the top holdings following the suspension last month:

More on the continued suspension of M&G’s £2.5bn UK property fund.

The investment firm said the decision to keep the fund gated was taken “in the interest of protecting the fund’s investor,” and assured they were working hard to boost its cash position.

Since the end of November the fund has sold around £70.4m worth of assets and M&G said it is poised to raise another £67.2m.

They’ve ended up having to sell the Ravenside Retail Park in Edmonton, which hosts retailers including Mothercare, Carpetright, Wickes, and Argos, for £51.4m.

M&G has also exchanged contracts on a property at 20 Kingston Road in Staines for £19m.

The M&G statement said:

The immediate priority is to raise cash levels in a controlled manner. The fund managers and associated teams are working hard to increase the fund’s cash position and since the end of November, they have exchanged or completed on £70.4m of assets and a further £67.2m is either under offer or in solicitors’ hands.

Once cash levels have been sufficiently restored, the fund’s ACD [authorised corporate director] will re-open the Fund for dealing.

Naturally, the fund is still being actively managed and M&G is regularly communicating with clients, customers and other stakeholders.

City watchdog the Financial Conduct Authority been notified of the continued suspension.

UK factory output has contracted at the fastest pace since July 2012. It has now been below the neutral mark of 50 for eight months straight.

But given the poor factory reading from the Eurozone, some analysts are pointing out that the UK performed relatively better:

Chris Williamson, chief business economist at IHS Markit commenting on the latest eurozone PMI reading, says it will be a challenge to keep the eurozone economy out of recession in light of such a deep manufacturing contraction.

Williamson said:

Eurozone manufacturers reported a dire end to 2019, with output falling at a rate not exceeded since 2012. The survey is indicative of production falling by 1.5% in the fourth quarter, acting as a severe drag on the wider economy.

Although firms grew somewhat more optimistic about the year ahead, a return to growth remains a long way off given that new order inflows continued to fall at one of the fastest rates seen over the past seven years.

Firms sought to reduce inventory levels and cut headcounts as a result, focusing on slashing capacity and lowering costs. Such cost cutting was again also evident in further steep falls in demand for machinery, equipment and production-line inputs.

Only households provided any source of improved demand in December, underscoring how the consumer sector has helped keep the economy out of recession in recent months.

The ability of the wider economy to avoid sliding into a downturn in the face of such a steep manufacturing contraction remains a key challenge for the eurozone as we head into 2020.

IHS Markit explained that both production and new orders continued to deteriorate in December, with output falling for an eleventh successive month and at a rate that matched September’s 81-month record.

The PMI report said:

There was a broad-based softening of PMI figures during December, with seven of the eight countries covered by the survey recording weaker PMI numbers compared to November (the exception being Austria, which registered an unmoved reading).

Germany was again the weakest-performing country, whilst the deteriorations seen in Italy and the Netherlands were the sharpest in over six-and-a-half years.

Conversely, growth was sustained to a solid degree in Greece, whilst a marginal gain was seen in France.

Eurozone manufacturing PMIs are expected in less than five minutes time, but there are poor readings already coming out of individual countries including France, Germany and Italy.

Howard Archer, economic advisor to the EY ITEM Club has details on the data:

The pound’s decline is helping prop up the UK’s blue chip stocks this morning, as foreign earnings are worth more to multinational UK firms when sterling is weaker.

The UK currency is suffering as we edge closer to Brexit, set for the end of January.

Connor Campbell, a financial analyst at SpreadEx, says:

The FTSE, which struck 7650 towards the end of last year before tumbling at its close, added 0.8%, lifting back to 7600 in the process.

The index was helped by sterling’s 0.3% decline against the dollar and euro alike, the currency feeling the pressure now that we are less than one month away from leaving the EU.

The pound will be hoping for a better than forecast UK manufacturing PMI to act as a bit of reassurance.

Mining giants Glencore and Antofagasta are among the top movers on the FTSE 100, up 2.5% and 2.2% respectively.

Education publisher Pearson is ticking higher alongside, up 2.3%.

But positive sentiment has swept across London’s blue chip index, leaving just seven stocks in the red, though the declines are relatively muted: none are trading lower than -1%.

European stocks have jumped at the start of their first trading day of 2020:

• FTSE 100: up 0.58%
• French Cac 40: 0.6%
• Spain’s IBEX: up 0.8%
• Italy’s FTSE MIB: up 0.5%
• Europe’s Stoxx 600: 0.3%

The German Dax is the only major index currently bucking the trend, trading lower by around 0.1%.

Excitement about the US-China trade could be short-lived, with the devil likely to be the details of the Phase Two agreement.

David Madden, a market analyst at CMC Markets UK, explains:

President Trump said that phase one of the trade deal will be signed on 15 January, and even though a lot of the good news has already been factored in, it should assist with the bullish mood.

Once the phase one hurdle has been cleared, traders will start to think about phase two.

The second-leg of the trade deal will address trickier topics like intellectual property rights. Seeing as the first stage of the trade dispute dragged on for approximately 18 months, the next leg could last even longer – seeing as it is likely to be much complex.

Mr Trump needs to show that he is standing up for American interests, but Beijing can play the long game, so the Chinese government have no incentive to meet all his demands.