London, England -- (SBWIRE) -- 03/10/2011 -- Market Strategist Joshua Raymond of http://www.cityindex.co.uk/”">spread betting provider City Index (http://www.cityindex.co.uk/) shares his market insights on the morning of 28th February, including news of disappointing earnings from HSBC and Associated British Foods.
“Disappointing earnings from HSBC and Associated British Foods along with continued tension over the situation in Libya and the Middle East has weighed on European indices this morning, forcing the FTSE 100 and DAX both lower between 0.1% - 0.3%.
Tensions continue to surround developments in Libya, with the price of Crude Oil gaining ground on the back of those fears. Equity traders have proved particularly sensitive to any spike in the price of crude oil and with prices gaining yet again today, this has kept traders on the back foot today.
HSBC earnings disappoint
Along with the price of Crude Oil gaining today, traders have been left disappointed by earnings from HSBC, which missed market expectations despite seeing net income more than double for the year. The bank saw net income rise to $13.2 billion from $5.83 billion the previous year but this fell short of market consensus with most traders looking for net income to come in around the $13.7 billion mark. The bank saw similar difficulties in its investment banking unit to that of some of its peers, with profit falling $1 billion year-on-year to $9.5 billion. The results have left a somewhat sour taste in investors’ mouths this morning and as a result, they have sold out of HSBC’s shares, which have subsequently fallen 3% in London, weighing on the FTSE 100 Index.
Associated British Foods weigh as Primark sees slower sales
Results from Associated British Foods, the owner of budget fashion retailer Primark, have also weighed on the markets today. The firm reported that sales growth at Primark had slowed, showing a noticeable slowing down of demand in UK consumer demand. The company said sales will grow by 3%, which was below the market expectations of a 4% growth in sales for the first quarter.
This is likely to send out a bit of a warning sign to other high street fashion retailers, particularly given Primark’s popularity as a discount fashion retailer and especially in the context of potential hikes in interest rates likely to come sooner as opposed to later.
The firm also saw sugar profits being hit in the UK from higher processing costs. The earnings have triggered a 4% fall in ABF’s share price.”
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