U.K. blue-chip stocks edged lower Tuesday, as investors dashed out of shares of London-listed heavyweights HSBC PLC and BHP Billiton PLC after disappointing financial updates from the bank and the miner.
That made for a tentative start to U.K. trading as investors in other global equity markets returned from holidays.
How markets are moving
The FTSE 100 index UKX, -0.17% was down 0.1% at 7,239.13, hurt by losses in the financial and basic material groups. On Monday, the London benchmark fell 0.6%.
The pound GBPUSD, -0.1000% traded at $1.3957, down from $1.3999 late Monday in New York, as the dollar staged a recovery from a recent slide.
The yield on the 10-year gilt TMBMKGB-10Y, +0.01% was up 2 basis points at 1.62%, according to Tradeweb. Yields rise when prices fall.
Check out: More investors looking to cut U.K. assets as Brexit uncertainty persists
What’s driving markets
The slight pullback at the London open came as S&P 500 futures ESH8, -0.65% roamed between small gains and losses, ahead of the return of U.S. investors from Monday’s Presidents Day holiday. In Hong Kong, equities HSI, -0.78% lost ground as trading resumed following the Lunar New Year holiday. Volumes in European stock trading were thinner than usual on Monday, affected by the holidays.
The FTSE 100 lagged other European markets SXXP, +0.12% as the financial and basic materials sectors lost ground. Those declines were led respectively by HSBC and by BHP Billiton, the world’s largest listed miner by market value. Those two sectors make up more than 33% of the benchmark’s weighting.
Traders may zone in on a speech David Davis, the minister in charge of Brexit, later Tuesday in Austria. They may watch for clues to the government’s plan for the U.K.’s withdrawal from the European Union, as calls grow for greater clarity on issues such as the transition period. Davis is expected to say that worries about the U.K. entering a “’Mad Max-style world borrowed from dystopian fiction” are unfounded.
What strategists are saying
“Ignoring all this earnings negativity, the FTSE managed to eke out a 0.1% rise after the bell,” said Connor Campbell, financial analyst at Spreadex.
“That’s likely because sterling itself was in trouble this Tuesday: The currency fell a further 0.4% against the dollar, leaving cable back below $1.395 for the first time in almost a week as sterling displayed some pre-David Davis Brexit speech jitters,” he said in a note.
Stock movers
HSBC PLC shares HSBA, -3.34% HSBA, -3.34% dropped 3.7% after the Asia-focused lender missed full-year profit expectations. The bank’s earnings were hit by the collapses of two borrowers: U.K. services and construction company Carillion PLC and South African retailer Steinhoff International Holdings SNH, -2.29% .
BHP Billiton PLC BLT, -3.97% BHP, -2.44% BHP, -0.41% slumped 3.6% as first-half profit before one-off items of $4.05 billion came in below the $4.21 billion consensus estimate in a Wall Street Journal poll of analysts. But BHP said it would raise its midyear payout by 38%.
InterContinental Hotels Group PLC shares IHG, -3.98% sloughed off 4.3%. The company, whose brands include Crowne Plaza and Holiday Inn, said “no additional capital return will be paid in calendar year 2018,” so it may focus on growth plans. IHG’s 2017 pretax profit was ahead of expectations and that it will raised its total dividend for the year.