Market analysts struggled to find a silver lining in this gloomy report. Conduct fines and settlements for currency rigging have left a dent in their numbers. Even simple operational metrics such as operating costs controls and margins were a disappointment. All this has come at a time when the company is faced with a tax evasion scandal at its Swiss private bank.
HSBC shares closed down 4.6% in London overnight. With its estimated weight of roughly 11% on the Hang Seng Index, it looks likely to drag the index down at opening.
Looking at the charts, the stock looks like it is still trapped in its downward channel. While HK$70 has been a recent support, the poor earnings release and overnight closing levels in London could break this level. The next support for the stock could be roughly around the HK$66-$67 low from the end of 2012. Should the stock break above this down channel, however, a resistance in the HK$73 range may be reached.
It’s been a mixed start to the week with European markets trading up slightly while US and UK indices were down slightly. Enthusiasm about Greece faded as traders recognised last week’s ‘deal’ was the just the beginning of a new round of negotiations which could be really bumpy. Meanwhile, US traders appeared reluctant to get too enthusiastic ahead of tomorrow’s testimony from Fed Chair Yellen.
Over the next 24 hours there are three central bank speeches that could impact markets.
First up is ECB President Draghi. Traders may look to him for comments on the ECB’s support of Greece, and for more colour related to the central bank’s new QE program which starts next month.
Second is FOMC Chair Yellen’s semi-annual testimony to Congress. Traders may look to her for an indication of when the Fed may start to raise interest rates, of whether there is any chance lift-off could be delayed from the widely expected mid-year start, and of how aggressively the central bank may be willing to act.
Finally, Bank of Canada Governor Poloz is speaking. From him, traders may be looking for an indication of how soon and how much the Bank of Canada could cut rates again following last week’s pitiful Canadian retail sales report and the oil price/sector crash.
Crude oil had another choppy day. For most of the day it was down sharply after a slowdown in active rig declines, the reopening of a pipeline in Libya and a growing refinery strike in the US raised concerns about a growing glut in supply.
Rumours that some OPEC members would like to call an emergency meeting - presumably to talk production cuts - helped to lift oil up off its lows of the day. This wasn’t enough to boost WTI back above $50. Natural gas and heating oil were mixed, even with no end in sight to the big deep freeze.
HSBC reported lower-than-expected numbers after the close of trading in Hong Kong last night.
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