HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - UK stocks closed lower Wednesday, with the FTSE 100 ending down for a second consecutive day as investors digested some disappointing macro economic data from Asia and a batch of mixed earnings from individual UK stocks.

The FTSE 100 ended every day of last week in the black, but sentiment has been negative so far this week.

"Investors are struggling for reasons to remain bullish with many markets already around highs, plenty of headwinds, the OECD (Organization for Economic Cooperation and Development) cutting global growth expectations and a disappointing night for macroeconomic readings," said Michael van Dulken, head of research at Accendo Markets.

The Chinese service sector growth remained weak in April, while the Japanese services PMI also disappointed, according to overnight data. The headline HSBC services purchasing managers' index for China fell to 51.4 in April, from 51.9 in March. Meanwhile, Markit Economics revealed that the service sector in Japan contracted in April, coming in at 46.4 in April, down from 52.2 in March.

This came after the OECD lowered its 2014 global growth outlook on the back of slowing growth in emerging markets, especially China, on Tuesday. It said it now expects the global economy to grow by 3.4% this year, down from a forecast of 3.6% in its November 2013 review.

The FTSE 100 spent the day in the red, and closed fractionally lower at 6,796.44. The FTSE 250 closed down 0.4% at 15,881.95, and the AIM All-Share closed down 1.1% at 811.11.

European stocks experienced a roller-coaster day, but eventually ended higher. The CAC 40 in Paris closed up 0.4%, and the DAX 30 in Frankfurt closed up 0.6%.

At the UK equity market close, the DJIA was up 0.1%, while the NASDAQ Composite was down 1.3%, and the S&P 500 was down 0.1%.

HSBC Holdings, the FTSE 100's second-largest constituent by market capitalisation after Royal Dutch Shell, closed down 1.3% after it reported a 20% drop in first-quarter pretax profit, driven by a weak performance Asia, Latin America and its investment bank, that was only partially offset by lower impairment charges and continued cost cutting.

It said first-quarter pretax profit fell to USD6.79 billion, from USD8.43 billion in the corresponding quarter a year earlier. The bank also said it continued to experience "muted" customer activity in April.

Experian ended the day as the biggest faller in the blue chip index, closing down 6.5%. The credit checking and information company reported an increase in full-year pretax profit, but said it faces a number of constraints in the short-term.

"In the short term, we face a number of one-off headwinds, most notably a subdued trading environment in Brazil over the World Cup and the revenue impact of the changes we are driving in North American Consumer Services, which together will constrain growth in the first half," Don Robert, chief executive, said in a statement.

The group also said it had appointed a new chief operating officer after Chris Callero decided to stand down at the company's annual general meeting in July.

Supermarket chains WM Morrison Supermarkets, J Sainsbury and Tesco ended the day down 4.9%, 2.5%, and 0.6%, respectively, after Kantar Worldpanel put out the latest market share data for the sector, showing the lowest growth in the grocery market for 11 years.

Sainsbury's shares had jumped earlier in the day after it posted higher pretax profit for its recent financial year, as the group's convenience stores and online offering continued to drive growth. Pretax profit rose 16% to GBP898 million, buoyed by a 2.8% increase in sales to GBP23.95 billion and gains on the value of its properties.

However, the retailer also predicted little or no like-for-like sales growth in the current year as the big four supermarkets battle it out to attract consumers who are still spending cautiously.

At the other end of the spectrum, G4S, closing up 4.1%, was the index's biggest riser. Shares in the security company jumped after it said it had performed in line with its plans during the first quarter of 2014, as it was boosted by a series of contract wins in countries including the US, Brazil, the Middle East and with the UK government.

It said revenues were up 4.8% on the first quarter in 2013, with organic growth up 5.0%.

Legal & General Group was the second biggest riser, closing up 3%. The firm gained after it said it expects to write more than enough bulk-purchase annuities to offset an expected decline in the individual annuities market in the wake of UK regulatory changes.

It said bulk purchase annuity premiums increased to GBP3.05 billion from GBP357.0 million, boosted by a GBP3.00 billion deal for the ICI Pension Fund announced in March. However, individual annuity sales fell by 40% to GBP244.0 million as people cancelled GBP15.0 million annuities taken out prior to changes made in the Budget.

EasyJet ended the day up 2% after it said it flew more passengers and filled more of its planes in April compared with the previous year thanks to this year's late Easter, but its passenger numbers also grew strongly over the 12 months to the end of April.

The low-cost airline said it flew nearly 5.8 million passengers in April, up from nearly 5.3 million a year earlier, while its load factor, a measure of how many seats it fills on its planes, rose to 89.8%, from 86.7%. Easter, a key trading period for airlines like easyJet as more people fly over holiday periods, fell in April this year and in March in 2013.

However, easyJet also showed strong growth for the rolling 12 months to the end of April, which balances out factors like Easter. It flew 62.4 million passengers in the latest 12 month period, compared with 59.9 million in the previous 12 months. Its load factor was 89.7%, up from 89.1%.

In the data calendar Thursday, Chinese trade data for April are released at 0300 GMT, ahead of German industrial production numbers for March at 0600 GMT. The Bank of England is scheduled to release its latest interest rate and monetary policy decisions at 1100 GMT, with the European Central Bank's interest rate decision released at 1145 GMT.

"There are whispers in the press that the strength of recent UK economic data could persuade the BoE to hike interest rates sooner than the current market consensus of the second quarter of 2015," says Jane Foley, senior FX strategist at Rabobank.

However, economists' expectations are for both the BoE and ECB to maintain their interest rate levels at 0.5% and 0.25%, respectively on Thursday.

In the US, weekly jobless claims data are published at 1230 GMT.

There are a host of speeches due from US fiscal policy makers. President of the Federal Reserve Bank of Chicago Charles Evans speaks at 1125 GMT, ahead of Daniel Tarullo, member of the Board of Governors of the Federal Reserve, at 1130 GMT. Fed Chair Janet Yellen gives a speech at 1330 GMT, with President of the Federal Reserve Bank of St. Louis James Bullard speaking at 1800 GMT.

In the corporate calendar, FTSE 100-listed Standard Chartered, RSA Insurance Group, Barratt Developments, IMI, WM Morrison Supermarket, and Prudential are joined by FTSE 250-listed Perform Group, Provident Financial, Supergroup, Beazley, and Intu Properties in releasing trading updates.

Blue-chips BT Group and Sage Group provide full-year results, while Randgold Resources release first-quarter results. Barclays releases its keenly-awaited group strategy update.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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