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London open: Stocks fall after Apple warning; HSBC weaker on results

By Michele Maatouk

Date: Tuesday 18 Feb 2020

London open: Stocks fall after Apple warning; HSBC weaker on results

(Sharecast News) - London stocks fell in early trade on Tuesday, taking their cue from a downbeat session in Asia after US tech giant Apple warned on revenue, with HSBC under pressure as it posted a decline in annual profit.

At 0835 GMT, the FTSE 100 was down 0.4% at 7,401.29.

Sentiment took a hit after Apple warned overnight that it will not meet its revenue guidance for the current quarter due to disruption from the coronavirus outbreak.

Neil Wilson, chief market analyst at Markets.com, said: "This is just enough reason for the market to come off a touch today in Europe and the US. US traders return from their three-day weekend so it's back to normal but with an Apple-sized warning to welcome them back.

"Apple says it won't hit its Q2 revenue guidance of $63-67bn due to the Covid-19 outbreak in China. In warning in this way Apple has neatly summed up the knock to global growth stemming from both reduced output and consumption.

"Firstly, how anyone is surprised by this is beyond me. Clearly there is going to be a hit to both output and consumption in the world's second largest economy and the world's growth driver. This is bound to hit earnings of companies exposed - Apple being the bellwether."

On the UK data front, the ILO unemployment rate, claimant count and average earnings are all due at 0930 GMT.

"Today's jobs numbers are expected to show that unemployment for the three months to December remained steady at 3.8%, a 45-year low, with wages excluding bonuses expected to come in at 3.3%, slightly down from 3.4% in November," said CMC Markets analyst Michael Hewson.

In equity markets, HSBC was under the cosh after it reported a one-third fall in annual profit and wrote down more than $7bn (£5.4bn) of goodwill. Pre-tax profit for the year to the end of December declined 33% to $13.3bn as revenue rose to $56.1bn from $53.8bn. The bank's interim chief executive, Noel Quinn, told Reuters that it would be making big cuts to its workforce, slashing around 35,000 jobs.

InterContinental Hotels lost ground as its full-year results were in line with consensus expectations but revenue per available room remained weak.

Miner BHP was in the red despite saying that first-half earnings surged 29% on the back of higher iron ore prices as the dividend payout was tempered by short term caution over the coronavirus. Underlying earnings at the world's biggest miner rose to $5.2bn from $4.03bn a year earlier. The interim dividend was increased 18% to 65 cents a share, reflecting "caution due to near term market volatility driven by the 2019 coronavirus disease outbreak, trade policy and geopolitics", BHP said.

Glencore fell after saying it swung to a net loss of $404m from a profit of $3.41bn in 2018, as it took a hit from $2.8bn of impairment charges. Adjusted earnings before interest, tax, depreciation and amortisation slid 26% to $11.6bn, but this was still ahead of analysts' expectations of $11.06bn.

Miners were weaker overall, with Anglo American and Antofagasta both down, while Russian steelmaker Evraz retreated.

Engineer Weir was the worst performer on the FTSE 250 after US peer Gardner Denver's fourth-quarter results disappointed.

Market Movers

FTSE 100 (UKX) 7,401.29 -0.43%
FTSE 250 (MCX) 21,753.19 -0.34%
techMARK (TASX) 4,106.74 -0.25%

FTSE 100 - Risers

NMC Health (NMC) 830.00p 3.75%
Severn Trent (SVT) 2,660.00p 1.68%
United Utilities Group (UU.) 1,021.00p 1.04%
Polymetal International (POLY) 1,277.50p 0.91%
Reckitt Benckiser Group (RB.) 6,377.00p 0.87%
National Grid (NG.) 1,052.00p 0.69%
Taylor Wimpey (TW.) 233.30p 0.60%
AstraZeneca (AZN) 7,421.00p 0.60%
Centrica (CNA) 73.06p 0.58%
Rentokil Initial (RTO) 494.60p 0.51%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 564.70p -4.40%
Evraz (EVR) 381.00p -1.83%
InterContinental Hotels Group (IHG) 4,749.50p -1.66%
TUI AG Reg Shs (DI) (TUI) 867.40p -1.43%
Anglo American (AAL) 2,075.00p -1.35%
BHP Group (BHP) 1,669.00p -1.34%
Rolls-Royce Holdings (RR.) 674.00p -1.32%
Antofagasta (ANTO) 865.80p -1.30%
Prudential (PRU) 1,475.00p -1.24%
Spirax-Sarco Engineering (SPX) 9,165.00p -1.19%

FTSE 250 - Risers

Vivo Energy (VVO) 115.60p 4.14%
Airtel Africa (AAF) 77.90p 3.32%
Sanne Group (SNN) 665.00p 2.78%
Watches of Switzerland Group (WOSG) 387.00p 2.38%
Stagecoach Group (SGC) 139.00p 1.46%
Go-Ahead Group (GOG) 2,242.00p 1.45%
Ascential (ASCL) 371.60p 1.36%
Fresnillo (FRES) 673.00p 1.14%
Provident Financial (PFG) 470.00p 1.08%
RIT Capital Partners (RCP) 2,100.00p 0.96%

FTSE 250 - Fallers

Weir Group (WEIR) 1,366.00p -2.98%
Wood Group (John) (WG.) 404.10p -2.23%
Kaz Minerals (KAZ) 500.80p -2.07%
AJ Bell (AJB) 381.00p -2.06%
Baillie Gifford Japan Trust (BGFD) 780.00p -1.89%
Ferrexpo (FXPO) 147.00p -1.80%
Jupiter Fund Management (JUP) 403.80p -1.80%
Spectris (SXS) 2,717.00p -1.74%
Hays (HAS) 163.00p -1.57%
Avast (AVST) 441.00p -1.56%

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