HSBC Stock – London close: Stocks weaker as Fed meeting gets underway
Stocks finished below the waterline in London on Tuesday, even after better-than-expected results out of BP and HSBC.
Sterling was in the green, meanwhile, last trading 0.06% stronger against the dollar at $1.3906, and gaining 0.11% on the euro to €1.1515.
“It’s been a pretty lacklustre day for markets in Europe today, with the FTSE 100 and DAX both drifting back on the back of a weaker Asia session, as concerns over events in India act as a drag on global recovery prospects,” said CMC Markets chief market analyst Michael Hewson.
“There may also be some anxiety over recent sharp rises in commodity prices, which are now starting to bleed into the agriculture sector, as both corn and wheat prices surge to multi year highs, largely oversupply concerns due to unseasonably dry weather in North and South Dakota.”
Investors were closing their wallets in anticipation of the US Federal Reserve’s latest policy guidance on Wednesday, as the central bank’s two-day policy meeting got underway across the Atlantic.
Also dampening sentiment, US carmaker Tesla‘s shares were down more than 3% on Wall Street even after it reported stronger-than-expected quarterly profits.
Those profits were boosted by exceptionals, however, including the sale of $780m of regulatory credits and $101m of Bitcoin.
On the economic side of things, the Confederation of British Industry‘s distributive trades index jumped to a positive 20 in April from the negative 45 reading in March, above consensus expectations for 10 points above zero.
In equity markets, energy giant BP was down 0.42% even after reporting better-than-expected first quarter profits on the back of higher oil prices, hit its debt reduction target early, and said it would resume share buybacks in the second quarter to the tune of $500m.
BP’s first-quarter underlying replacement cost profit, the company’s measure of net profit, came in at $2.6bn, compared with a $115m in the final quarter of 2020 and $791m a year earlier.
Analysts had expected a first-quarter profit of $1.4bn.
“The share price response has been somewhat underwhelming, despite management’s commitment of a 60% return of surplus cash flow if the business continues to perform as expected,” Michael Hewson said.
“Perhaps this muted response has more to do with scepticism that this can be achieved as the company looks to steer itself towards a greener future.”
Workspace provider IWG was 0.88% weaker after it said occupancy at its serviced offices “stabilised” and then “improved modestly” towards the end of the first quarter.
Over the three months ended 31 March, open centre revenues were down 16.1% to £523.1m and pre-2020 sales fell 20.1% to £496.1m at constant currencies, with the firm pointing out that the same period a year ago saw the strongest start to a year ever.
The reverse was true of the latest three-month stretch, which IWG described as its “most challenging” ever, although it predicted the first quarter was an inflection point, with “positive momentum” set to continue through the next quarter.
Software firm Aveva slid 5.43% after it reported double-digit revenue growth for the second half of its financial year.
The company said its strong showing on the topline over the past six months had resulted in full-year revenues being flat year-on-year, on a standalone organic constant currency basis, reflecting disruptions related to the Covid-19 pandemic.
The FTSE 100-listed group also noted that it had “responded flexibly” to the challenges posed by Covid-19, growing combined pro forma revenue for the enlarged group by “a low single-digit percentage” on an organic constant currency basis, while achieving strong growth in subscription revenues and increasing operating margins.
Halma was off 1.1% after announcing the acquisition of North Carolina-based PeriGen, a provider of artificial intelligence software with an automated early warning platform during labour.
The engineer said the cash consideration for PeriGen was $58m (£42m) on a debt free basis, with the transaction to be funded from its existing facilities.
It said PeriGen’s unaudited revenue for the year ended 31 March was about $20m, with return on sales slightly above Halma’s target range of between 18% and 22%.
On the upside, HSBC jumped 4.18% after its first quarter profits more than doubled over a year ago, boosted by a $400m reversal in its credit losses, profits across all major divisions, and with its European and US operations back in the black.
For the three months ended 31 March, the lender posted adjusted pre-tax profits of $6.4bn – well above the $4.3bn anticipated by the analyst consensus.
FTSE 100 – Risers
HSBC Holdings (HS(BA)) 440.40p 4.18%
Experian (EXPN) 2,791.00p 1.90%
Lloyds Banking Group (LLOY) 43.58p 1.60%
Entain (ENT) 1,724.50p 1.44%
BT Group (BT.A) 158.60p 1.31%
NATWEST GROUP PLC ORD 100P (NWG) 201.40p 1.21%
Standard Chartered (STAN) 489.40p 1.07%
United Utilities Group (UU.) 952.80p 1.04%
Severn Trent (SVT) 2,430.00p 1.00%
Flutter Entertainment (CDI) (FLTR) 15,645.00p 0.87%
FTSE 100 – Fallers
Aveva Group (AVV) 3,695.00p -5.43%
Rolls-Royce Holdings (RR.) 102.94p -4.53%
Bunzl (BNZL) 2,342.00p -4.37%
Whitbread (WTB) 3,297.00p -3.34%
Polymetal International (POLY) 1,559.50p -2.77%
Fresnillo (FRES) 886.60p -2.23%
Renishaw (RSW) 6,425.00p -2.13%
Ashtead Group (AHT) 4,691.00p -2.11%
Informa (INF) 558.00p -2.10%
Hikma Pharmaceuticals (HIK) 2,325.00p -1.94%
FTSE 250 – Risers
TUI AG Reg Shs (DI) (TUI) 433.30p 4.41%
Elementis (ELM) 150.20p 3.37%
Rank Group (RNK) 195.00p 3.10%
Restaurant Group (RTN) 127.40p 2.74%
Babcock International Group ((BA)B) 304.00p 2.08%
Morgan Sindall Group (MGNS) 2,305.00p 1.99%
Investec (INVP) 270.50p 1.88%
Greencore Group (CDI) (GNC) 157.70p 1.74%
Serco Group (SRP) 143.80p 1.70%
Hochschild Mining (HOC) 197.70p 1.59%
FTSE 250 – Fallers
SSP Group (SSPG) 320.70p -4.61%
Beazley (BEZ) 327.20p -4.16%
Ascential (ASCL) 340.00p -4.06%
Avon Rubber (AVON) 3,370.00p -3.74%
FirstGroup (FGP) 83.60p -3.58%
Ninety One (N91) 240.60p -3.53%
Hiscox Limited (DI) (HSX) 811.80p -3.50%
Brewin Dolphin Holdings (BRW) 335.50p -3.46%
FDM Group (Holdings) (FDM) 1,028.00p -3.38%
Wood Group (John) (WG.) 264.10p -3.33%