HSBC falls below expectations while FTSE drops

Heading into the close the FTSE 100 is down 52 points, at 6494, as big banks lead the market lower.

HSBC logo
Source: Bloomberg

HSBC falls short of expectations

In London, the banks are bringing down the market. HSBC registered a small increase in profits but it fell well short of expectations. Fines for FX manipulation and even more provisions for the mis-selling of PPI goes to show that Europe’s largest bank isn’t without its flaws. The bank's Asian business performed particularity well compared with Standard Chartered.

RBS received a downgrade from Investec which sent the stock into the red; the sell rating flies in the face of the terrific third-quarter figures from the bailed out bank on Friday. Natural resource stocks were in the black for most of the session but traders didn't have nerves of steel.

Ryanair doesn't do things by half — shares in the Irish airline hit a record high as the new ‘nice guy’ of the skies image seems to be paying off. The low-cost carrier ramped by its full-year outlook and traders scurried on board. 

Dow down 37 points

In the US, the Dow Jones is down 37 points at 17,353. This is not a bad downward move considering the record close on Friday. The ISM manufacturing PMI figures smashed expectations, and now that quantitative easing has ended we are entering the phase where good news is bad news. Traders can live without a bond-buying scheme but the possibility of a rate rise is another story.

The US reporting season is coming to an end, and former Manchester United sponsor, AIG, will report after the closing bell. The insurer is half way through its turnaround process, and asset-stripping continues even though it repaid the US government for bailing it out and has returned to profitability. 

Gold at four-year low

Gold keeps going down the tube and has dropped to a four-year low. Year-to-date the metal has lost 1%, and it is on track to post an annual loss for the second time in 14 years. Gold has lost a lot of its appeal; a strong dollar and a healthy financial system has removed many of the traditional reasons to bank on the metal.

Meanwhile, copper is climbing higher as the HSBC survey of Chinese manufacturing remains unchanged on the month. Nowadays, Chinese figures meeting expectations is deemed as a win. 

Pound losses grip on $1.60

The Australian dollar is between a rock and a hard place. The largest and second largest economies in the world are moving in opposite directions, and the Aussie dollar is the piggy in the middle. The slowdown in China, and the end of QE from the Federal Reserve, has squeezed the Australian dollar.

It is a worrying sign that the pound couldn’t hold onto the $1.60 handle, even though manufacturing in October jumped to a three-month high. Traders are definitely expecting dovish tones from the Bank of England on Thursday.

It seems the euro can’t hang on to any rally, no matter how small the upward move. The mediocre manufacturing figures from the eurozone today explained why the single currency keeps sliding lower. 

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