FTSE 100 dragged lower by HSBC ahead of Nvidia’s ‘make or break’ results

The FTSE 100 was trading in the red on Wednesday as investors reacted to HSBC results and braced for Nvidia results, which will be released after the US close.

The FTSE 100 was trading down 0.75% at the time of writing.

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Stock-specific considerations were driving trade on Wednesday. HSBC weighed on the FTSE100 index after profits fell in Q4 due to impairment charges, and the company issued mixed guidance for the year ahead.

“If there was an award for simple and clean results then HSBC would get the booby prize. There’s a lot to unpack here, with the fourth quarter alone impacted by two major impairments: a $3bn write-down in the value of BoCom (Chinese bank) and a $2bn write-down from the sale of its French operation. Backing out a lot of the mess, it looks like performance was a little worse than expected with higher operating costs more than offsetting slightly better impairments,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

As the FTSE 100’s third-largest constituent by market cap, the 9% drop in HSBC shares erased many points from the FTSE 100 on Wednesday.

Rio Tinto & Glencore

Miners were under pressure on Wednesday after Rio Tinto and Glencore issued disappointing results following a year of depressed commodity prices. Glencore slashed its dividend while Rio Tinto increased the final dividend, but the full-year dividend will still be lower than last year’s.

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Profits were falling across the two miners, and cash generation was lower due to a slowdown in China and falling demand for natural resources.

Nvidia

Nvidia’s results after the US close tonight could prove to be the most explosive event of the day.

Whether they hold Nvidia or not, investors will be preparing for the chipmaker’s results tonight for evidence of sustained momentum in AI that has dominated markets over the past year.

“While equities have run out of steam in recent days, Nvidia’s results could be make or break time for markets,” said Danni Hewson, head of financial analysis at AJ Bell.

“Elevated expectations mean the chip specialist has no room for error. It needs to smash it out of the park and show that the AI boom still has momentum.

“Last time round it spooked investors with a warning about a slowdown in Asian sales linked to export restrictions. While that factor should have already been priced in by the market, there is still a chance some investors will have forgotten about the headwinds and get spooked by any weakness in that part of its results. Supply issues could also be a pinch-point for the business if the AI boom has intensified, although there have been suggestions by investment bank analysts that lead times are shortening.”

If Nvidia doesn’t satisfy investors’ expectations this evening, European stocks could open deep in the red tomorrow.

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