The London Stock Exchange Group offices are seen in the City of London, Britain. Photographer Toby Melville
UK’s exporter-heavy FTSE 100 fell on Tuesday, dragged lower by weakness in miners as well as a decline in HSBC shares after the London-headquartered bank dampened investors’ expectations of a sustained income bonanza from rising interest rates worldwide.
The blue-chip index (.FTSE) was down 0.3%, falling below 8,000 points after having closed above that mark for the past three days.
HSBC dropped nearly 1%, despite a surge in quarterly profit, as Europe’s biggest bank said it expects net interest income to be at least $36 billion in 2023, compared with forecasts of $37 billion.
“The markets are already expecting most central banks to be cutting interest rates again next year as they divert attention back to supporting growth and this will make life more difficult for all banks,” said Stuart Cole, head macro economist at Equiti Capital.
The decline in HSBC shares dragged the banking index down 0.2%. British businesses reported an unexpected bounce in activity as well as receding price pressures this month, a survey showed on Tuesday, suggesting the economy may be sidestepping the risk of recession.
Industrial metal miners fell 1.8%, with Anglo American down 3.8% and leading declines after its unit, Kumba Iron Ore, cut its production outlook.
Also weighing on the sub-index was Antofagasta which fell 1.9% as the Chilean miner more than halved its annual dividend and reported a drop in full-year profit.
Shares of Holiday Inn-owner IHG Plc fell 0.5% after it missed full-year revenue expectations due to China’s COVID curbs.
On the flip side, Smith+Nephew (SN.L) rose 5.1% on an upbeat 2023 revenue growth outlook.
The blue-chip FTSE 100 index has risen 7.3% so far this year, hitting a series of record highs on the way, supported by upbeat earnings, a weak pound and rising commodity prices.
The domestically focussed FTSE 250 midcap index was also down 0.3% on Tuesday.