Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
London open: Stocks steady as investors mull HSBC numbers, IWG tumbles
London stocks were steady in early trade on Monday as investors mulled over the latest results from banking giant HSBC.
At 0830 BST, the FTSE 100 was flat at 7,660.83, while the pound was down 0.1% against the dollar at 1.2988 and unchanged versus the euro at 1.1236 after international trade secretary Liam Fox said the probability of a no-deal Brexit was now at 60-40. Fox, in an interview with the Sunday Times, pinned the blame on the European Commission and Brussels’ chief negotiator Michel Barnier.
Investors were also digesting the latest trade war rhetoric from US President Trump over the weekend, after he defended his use of tariffs at a rally in Ohio on Saturday and said he now has the upper hand over China.
On the corporate front, HSBC was in the red as it said pre-tax profits rose 5% to $10.7bn (£8.23bn), reflecting a net favourable movement in significant items and favourable currency translation. However, adjusted profit before tax of $12.1bn was 2% lower, as revenue growth and lower expected credit losses were partly offset by higher operating expenses.
The bank also announced the appointment of Jonathan Symonds, formerly chairman of HSBC Bank plc, as its deputy chairman.
IWG slumped after saying it has called off the months-long talks with three suitors, Starwood, Terra Firma and TDR, as the serviced office company’s directors believe none of them “capable” of buying the business for a price they could recommend to shareholders. IWG also posted a 7.1% rise in in interim group revenue to £1.2bn, but a 31% drop in operating profit to £60.0m.
Neil Wilson, chief market analyst at Markets.com, said: “If you consider that IWG has been in talks with multiple potential partners but failed to agree terms with any of them; either it’s reflective of management’s confidence in the future growth or they’re holding out for too high a price.
“They clearly have an eye on the kind of valuation that WeWork enjoys and think they should be achieving something similar. But this corporate Penelope may be playing it too cool.”
Spire Healthcare tumbled after warning that 2018 earnings will be “materially” lower than the previous year amid weakness in the NHS business, while Vedanta Resources slipped even as the miner said first-quarter revenues rose 15% and earnings grew 26%.
Low-cost carrier EasyJet flew a touch lower as it said passenger numbers rose 4.5% year-on-year and the load factor improved 0.1 percentage points to 96.9%, but Wizz Air was in the green after posting a 23% jump in passenger numbers for July.
Ultra Electronics was on the front foot despite reporting a drop in first-half profit as it took a hit from cost overruns on certain development contracts.
Synthomer rallied as it said interim underlying pre-tax profit increased 6.4% and backed its full-year expectations and John Laing Infrastructure Fund advanced as it agreed to a takeover by a consortium of funds for £1.4bn.
In broker note action, Quilter was initiated at ‘neutral’ by JPMorgan and at ‘buy’ by Goldman Sachs.
Mitie was upgraded to ‘buy’ at Stifel, while William Hill was lifted to ‘overweight’ at Barclays and Morgan Advanced was upgraded to ‘buy’ at Berenberg.
TP ICAP was boosted to ‘buy’ by Peel Hunt, while Ferrexpo was lifted to ‘outperform’ at Credit Suisse and IG Group was downgraded to ‘sell’ at Shore Capital.
Elsewhere, Credit Suisse downgraded its stance on UK equities to ‘benchmark’ from ‘overweight’, noting that since its upgrade at the end of April, they have outperformed euro area stocks by around 3% and global stocks by around 1%. It cited a more cautious view on commodities and said a relatively soft Brexit is likely , which should support sterling. In addition, the bank said the UK equity market is now overbought, adding that it underperforms 70% of the time this happens.
