FTSE 100 close: London dragged lower as HSBC suffers worst share price fall since 2008
HSBC and Glencore weighed on the FTSE 100 after markets were disappointed with the pair’s latest results, dragging the capital’s premier index into the red on Wednesday.
The FTSE 100 fell 0.73 per cent lower at 7,662.51 although the FTSE 250 index, which is more aligned with the health of the domestic economy, picked up 0.05 per cent to 19,118.97.
HSBC was the latest bank to announce results, following Barclays yesterday and Natwest last week, but markets were not impressed.
Its shares lost 8.4 per cent, its worst performance since the financial crisis, after it reported a $3bn write-down on its holdings in China’s Bank of Communications.
Traders were also concerned by 80 per cent fall in HSBC’s fourth quarter profits, which soured the announcement of a new $2bn buyback.
“Adding to the negative sentiment was guidance for net interest income in 2024 to be less than analyst forecasts, amid signs that central banks will cut rates this year,” Dan Coatsworth, investment analyst at AJ Bell said.
“The severity of HSBC’s share price drop was so bad that it acted as a massive drag on the FTSE 100 and caused the blue-chip index to fall by nearly one per cent,” he continued.
Shares in Glencore lost 1.2 per cent after the mining giant reported a drop in profit and cut shareholder returns.
The firm’s full-year 2023 figures showed the group reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $17.1bn in 2023, down by around half compared to a year ago.
In line with its policy to return a set percentage of profits to investors, the company lowered its base dividend to $1.6bn (£1.3bn) or 10p per share. However, the group did not announce an additional cash return by way of a share buyback as it has done in the past.
BAE Systems also lost 1.5 per cent on Wednesday, despite reporting a strong set of results.
Britain’s premier defence contractor’s orrder backlog hit £69.8bn for the 12 months to 31 December, driven by an order intake of £37.7bn. It followed a number of significant contract awards, including for the ‘AUKUS’ submarine program and Dreadnought nuclear deterrent submarines.
Later this evening the Fed will release minutes from its latest policy meeting. Investors will look for any indication of when the Fed might start cutting interest rates.
“Minutes from the Fed’s latest interest rate meeting are published tonight and the content could destabilise equity and bond markets if it looks like rate cuts are being kicked further down the road,” he said.