Member Article

HSBC declines amid rising Emerging market costs

A Group of 20 meeting over the weekend was blamed for the negative sentiment that was evident across equity markets today, with Germany coming under pressure to conceded its opposition to enlarging the eurozone’s bailout fund. Britain’s George Osborne summed the scenario up succinctly stating that “we have to see the colour of the euro zone’s money first… Until it does there is no question of extra IMF money from Britain or probably anyone else”. Markets gave some ground from their recent highs on what appeared to be a crack developing between Germany and external lenders.

On a more positive note, Italy’s short term borrowing costs dropped to a 17 month low today as the country successfully sold more than €8.75 billion of 6-month bills at 1.202%, down from 1.969 in September 2010. Italian 10 year debt yield contracted in response to around 5.4% (meaning an increase in the bond’s price).

HSBC, Europe’s largest bank, fell 3.72% to 553.5p by the close of trade following the release of its 2011 full year results. With pre-tax profits at $21.9 billion the results far exceeded its European peers, although fell slightly shy of the $22.2 billion that was forecasts by analysts in a Reuters poll. The bank, that conducts the majority of its business outside Europe and North America, suggested it would struggle with its 2013 cost reduction targets due to increasing wages in China and Brazil, and it is possibly this news that was the most cause for concern.

Post market close we learnt that the Germany parliament approved the second Greek bailout by a margin of 496 to 90, obviously good news for Eurozone developments although one that was widely anticipated by the markets. The FTSE 100 finished down 20 points (0.33%) at 5916, whilst US indices were marginally higher at the time of writing, with sentiment improving throughout the afternoon.

This was posted in Bdaily's Members' News section by James .