The banking sector dragged on the London market yesterday after HSBC posted annual results which fell below market expectations.
HSBC’s profits of $19 billion US (€13.8 billion) for 2010 were more than double a year earlier, but the figure was slightly short of City expectations.
The FTSE 100 Index closed seven points lower at 5994, as Associated British Foods revealed a deterioration in sales growth at its discount fashion chain Primark.
The market did dip back into the black earlier in the session as oil prices stabilised despite the ongoing turmoil in Libya.
The pound was up against the dollar at 1.62 after mixed economic data in the US weakened the greenback. Sterling was also up against the euro at 1.17.
HSBC shares were down five per cent – or 33.1p to 678p – after it warned that a core target of its profitability will be cut due to the cost of tougher banking regulations.
Royal Bank of Scotland also dropped 0.4p to 45.2p, while Lloyds Banking Group was still under pressure following Friday’s results warning about the UK economic outlook, with shares 0.8p lower at 61.96p.
AB Foods slipped six per cent, or 60.5p to 966.5p, as it revealed Primark had seen a “noticeable” slowdown in UK consumer demand.
While half-year figures will be in line with market expectations, Shore Capital said there was more evidence that the company’s various divisions were experiencing either lower sales growth or margin pressure.
Next was also impacted by the Primark update as its shares fell 48p to 1976p.
Penguin, Financial Times and textbook publisher Pearson moved in the opposite direction, lifting 9p to 1050p, after reporting a 15 per cent rise in full-year profits to £857 million and a nine per cent increase in its dividend.
Results from fellow publisher Bloomsbury also made pleasant reading for investors as it forecast that 2011 will be the year of the e-book following strong demand for devices such as Kindle and iPad.
E-book sales are currently running at just under 10 per cent of print sales and this is expected to increase, the small cap stock said as it posted a four per cent rise in revenues and an improvement in underlying profits. Shares were up 2.3p to 118.3p, two per cent.
FTSE 250 recruitment firm Hays was another firm to see its shares rise in the wake of full-year results. Investec Securities upgraded the stock from hold to buy and said Hays had strong recovery prospects over the next two to three years, particularly due to its prospects in the Asia Pacific region. Shares were 4.8p higher at 124.8p, a gain of four per cent.
The biggest Footsie risers were Essar Energy up 17.4p at 517p, Hammerson ahead 14.3p at 466.1p, British Land up 14.5p at 583.5p and GKN ahead 5.2p at 209.9p.
The biggest Footsie fallers were Associated British Foods down 60.5p at 955.5p, HSBC off 33.1p at 678p, Next down 48p at 1976p and Morrisons off 6p at 276.8p.