The FTSE 100 fell on Tuesday after HSBC and Reckitt tumbled on poor updates, weighing on the index in what was otherwise a calm session for UK and European stocks.
The heavy weighting of both HSBC and Reckitt, and the scale of their declines, meant the index had little chance of staying positive, and the FTSE 100 was down 0.6% at the time of writing.
“Poorly received updates from HSBC and Reckitt have dragged down the FTSE 100, putting the UK stock market at the bottom of the pile in terms of European market performance,” said Russ Mould, investment director at AJ Bell.
“Slower growth than expected was to blame at both UK market giants, putting investors on high alert in case this is the start of a new trend across the corporate landscape.
Although HSBC’s headline figures were commendable, investors are always looking ahead, and the outlook wasn’t as convincing.
“Investors already know that higher interest rates are benefiting the banks so HSBC’s big increase in third-quarter profits was not enough to win them over – particularly as revenue fell short of expectations,” Russ Mould said.
“There may be disappointment at the performance of the wealth management division, which saw growth dry up in the quarter, while the company is warning of competitive pressure on deposits in both the UK and Hong Kong.”
HSBC shares were down 6% at the time of writing and were trading at the lowest levels since early May.
Reckitt shares have spent the best part of a decade going nowhere, and today’s update is unlikely to inspire investors as consumers feel the pinch and shy away from premium consumables.
Mark Crouch, market analyst for etoro, said: “The reduced sales outlook is a reminder that brand strength alone is not enough. Reckitt has the ingredients for sustained growth, but getting American production back on track and persuading consumers to keep paying a premium will determine how convincing that recovery becomes.”
Away from HSBC and Reckitt, most FTSE 100 shares were positive. Miners performed well, with Antofagasta jumping 3% to the top of the FTSE 100 leaderboard and Rio rising 1.9%. Rentokil rose 2.8% after announcing the start of a buyback programme.