easyjet Flies Higher as HSBC’s Jaws Widen

Monday, 30 October: the FTSE 100 started the day lower, following a selloff in Chinese bonds and ongoing political uncertainty in Spain suppressing market activity. The CAC 40 and Stoxx Europe 50  were lower as a result, as the DAX 30 remained marginally positive.

easyjet(+2.34%) gained altitude as it confirmed the purchase of assets from now defunct Air Berlin. The airline announced the acquisition of operating assets serving Berlin’s Tegel airport, including leases for up to 25 A320 aircraft and flight slots. Aircraft leases were taken on favourable terms,  and an offer of employment to Air Berlin’s flying crews was made. The costs is expected to be €40m, which will help expand the easyjet’s existing fleet of 279 vehicles by nearly 10%.

HSBC(-1.56%) slipped lower in trade today despite reporting a third quarter performance in line with expectations, as it announced a more than five-fold increase in profit for the quarter, driven by strong performance in Asia. The sharp rise in pretax profit was driven by the non-recurrence of a US$1.7bn loss recognised in the third quarter of 2016 in relation to the sale of the company’s operations in Brazil to Banco Bradesco. The increase was also attributed to higher revenue, which rose 36% to US$12.98bn.  However, investors were disheartened by an adjusted Jaws ratio of -4.9%, the difference between the percentage growth in income and the percentage growth in expenses. HSBC have targeted a positive figure for FY2017 which will be tough to achieve, given the reported figure for Q3.

Further UK economic data was indicative of a slowdown in UK unsecured borrowing in September, but remained above the six-month average as UK consumers continued to rely on cheap credit to fund expenditure. New consumer credit came in at £1.6bn for the prior month, down from £1.8bn in August, but still above the expectations of analysts(£1.5bn) polled by The Wall Street Journal.

Across Europe, indices were mixed at the close with the FTSE 100 -0.23%, the DAX 30 +0.09% and the CAC 40 -0.01%.

Leave a Reply