London midday: Stocks maintain losses as HSBC, Glencore slump

(Sharecast News) - London stocks were still in the red by midday on Wednesday, led lower by HSBC and Glencore after results, as investors eyed the latest minutes from the Federal Reserve and results from US AI chipmaker Nvidia. The FTSE 100 was down 0.8% at 7,654.42.

Danni Hewson, head of financial analysis at AJ Bell, said: "Markets remained skittish ahead of two major events on Wednesday that could have a significant influence over the direction of equities in the coming weeks. Tonight, we will get the minutes from the Federal Reserve's latest interest rate decision meeting as well as quarterly results from Nvidia. Both have the power to move the dial for investor sentiment.

"The Fed kept rates unchanged for the fourth time in a row at the January meeting and indicated it was not ready to start cutting. The meeting minutes should lift the lid on this thinking and more likely spell out that inflation needs to come down further before the central bank reaches for the scissors.

"Yesterday, the Bank of England's Andrew Bailey confirmed that the UK central bank wouldn't have to wait until inflation hits its 2% target before cutting rates, and that prompted a drop in bond yields. Markets are hoping the Fed follows the same path and takes a more flexible approach to cutting rather than waiting to hit its identical 2% target before lowering the cost of borrowing."

Investors were mulling the latest figures from the Office for National Statistics, which showed that the UK posted its largest budget surplus for the month of January since records began in 1993, at £16.7bn.

This exceeded the £7.5bn surplus in January 2023, but was smaller than consensus expectations of £18.5bn and the Office for Budget Responsibility's Autumn Statement forecast of £18.2bn.

For the first 10 months of the year, government borrowing came in at £96.6bn, lower than the OBR's official forecast of £105.8bn.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The government recorded a record budget surplus in January as the end of the energy support scheme and lower debt interest payments boosted coffers. January is a big month for tax receipts especially with the self-assessment deadline, but lower expenditure has put the finances on firmer footing.

"A large surplus was expected however, so it's not going to move the dial much on wiggle room for pre-election sweeteners."

In equity markets, HSBC was the worst performer on the FTSE 100 as it posted a record jump in annual profits and announced a $2bn share buyback but missed forecasts as it was forced to take a $3bn hit from its exposure to a Chinese bank.

The Asia-focused lender said full-year pre-tax profit rose 78% to $30.3bn driven by high global interest rates, but below the $34.1bn average estimate of brokers compiled by the bank.

Danni Hewson said: "The company has been stung by a $3 billion charge on its stake in a Chinese bank and write-downs associated with commercial real estate and the sale of its French business. That's made the results a bit of a mess and led to a miss on full year forecasts.

"The outlook is also a bit of fudge with the company expecting to hit previously guided returns in the mid-teens for 2024, but only once some one-offs are stripped out. Costs are moving higher and loan losses are also going in the wrong direction from the bank's perspective.

"Amid all the noise, news of a $2 billion share buyback has been lost which feels a little unfair given the company will have returned upwards of 10% of its market valuation in dividends and buybacks in respect of 2023."

Glencore fell as it reported a halving of its full-year adjusted earnings before interest, tax, depreciation and amortisation amid lower commodity prices.

BAE Systems lost ground despite posting better-than-expected full-year profits and saying that sales would grow further this year as the rise in geopolitical tensions drove increases in military spending by governments.

Cybersecurity firm Darktrace tanked after US peer Palo Alto Networks tumbled on Tuesday as it cut its full-year guidance.

Close Brothers was under the cosh again amid ongoing concerns about a regulatory probe into motor financing. The company announced last week that it was scrapping its dividend due to the probe, sending the shares tumbling.

Market Movers

FTSE 100 (UKX) 7,654.42 -0.84% FTSE 250 (MCX) 19,130.63 0.11% techMARK (TASX) 4,342.85 -0.68%

FTSE 100 - Risers

St James's Place (STJ) 666.00p 1.87% Beazley (BEZ) 583.50p 1.74% Endeavour Mining (EDV) 1,317.00p 1.54% Barclays (BARC) 164.28p 1.53% Prudential (PRU) 827.20p 1.50% Convatec Group (CTEC) 245.80p 1.49% SEGRO (SGRO) 873.20p 1.35% JD Sports Fashion (JD.) 113.40p 1.07% Burberry Group (BRBY) 1,321.00p 1.03% BT Group (BT.A) 107.95p 1.03%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 595.20p -7.55% Glencore (GLEN) 376.95p -3.45% BAE Systems (BA.) 1,212.50p -3.23% Centrica (CNA) 130.15p -2.44% Airtel Africa (AAF) 92.20p -1.65% Smith (DS) (SMDS) 319.40p -1.48% Antofagasta (ANTO) 1,750.00p -1.46% Standard Chartered (STAN) 592.80p -1.33% Rio Tinto (RIO) 5,161.00p -1.32% Imperial Brands (IMB) 1,801.00p -1.26%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 90.00p 4.65% The Renewables Infrastructure Group Limited (TRIG) 101.00p 4.12% Greencoat UK Wind (UKW) 133.80p 3.32% Aston Martin Lagonda Global Holdings (AML) 170.80p 3.08% Target Healthcare Reit Ltd (THRL) 78.40p 3.02% Fidelity China Special Situations (FCSS) 194.40p 2.42% Wood Group (John) (WG.) 149.20p 2.40% C&C Group (CDI) (CCR) 158.00p 2.20% Currys (CURY) 67.15p 1.97% Octopus Renewables Infrastructure Trust (ORIT) 76.80p 1.86%

FTSE 250 - Fallers

Close Brothers Group (CBG) 323.00p -8.50% Darktrace (DARK) 335.50p -6.81% Urban Logistics Reit (SHED) 121.20p -3.50% Apax Global Alpha Limited (APAX) 151.00p -1.95% Victrex plc (VCT) 1,325.00p -1.78% Ferrexpo (FXPO) 74.55p -1.65% Trustpilot Group (TRST) 190.40p -1.45% Spectris (SXS) 3,648.00p -1.27% Bellevue Healthcare Trust (Red) (BBH) 149.80p -1.19% Caledonia Investments (CLDN) 3,340.00p -1.18%