HSBC issued their first half results today, following a ‘’turbulent period’’ for the bank. Profits have declined 29% compared to the same period last year, down to $9.7bn, with the slowdown heavily weighted to Q2. Shares were actually up over 3% following the release, as analysts had expected the hit and got a nice surprise as the bank announced a $2.5bn share buy-back to be undertook during the second half of the year. Again it goes without saying a large amount of uncertainty and volatility has been from Britain’s decision to leave the EU, yet restructuring costs and global headwinds for financial institutions have compounded woes. Still HSBC makes a huge proportion of their profit outside the UK despite having their HQ in London.
Next shares led the FTSE higher during the early hours of trade after reporting improving sales during Q2. Overall sales were up 0.3%, as store sales fell 3.3%. Following this the clothing retailer has warned 2016 sales could fall by 2.5% citing a longer term trend of weaker clothing demand. This is better than a prior forecast, as their sales range has been drawn in from 3.5% higher or lower to 2.5% now, and although again nobody has any idea what will happen post Brexit it will likely mean higher costs due to the devaluation of the pound.
The UK’s Markit/CIPS PMI survey was also released this morning and it revealed the UK economy was contracting at the fastest rate since the 2008 global financial crisis. The index has fallen from 52.3 in June to 47.4 in July, making a BoE rate cut all but a foregone conclusion tomorrow and the chance of a recession in the UK has only increased.
On the day the FTSE 100 closed marginally down at 6,634.4 (-0.17%). At the time of writing US stocks were effectively yet to get away, both staying close after a few hours trade. At the top of the FTSE were HSBC whom closed the day 4.47% higher following the aforementioned results, Next shares closed over 4% higher too.
Tomorrow we look forward to the BoE, over to you Mark.