FTSE 100 -8 points at 7292
DAX -2 points at 11825
CAC +1 point at 4866
Euro Stoxx +1 point at 3313
HSBC Holdings (LON:HSBA) PLC ADR (NYSE:HSBC_pa) stock price lost up to 4.3% in Hong Kong after the bank’s fourth quarter profit missed estimates. HSBC printed $2.62 billion adjusted pre-tax profit versus $3.78 billion estimated by analysts. On unadjusted basis, the bank printed $3.4 billion loss in Q4. Moreover, the announcement of an additional $1 billion worth buyback plan, in addition to $2.5 billion already spend, also disappointed investors.
The Hang Seng index (-0.50%) traded in the red, mostly due to the decline in HSBC’s stock price (-91 points). Meanwhile, the China’s H-shares (Hong Kong shares) advanced to a three-month high on the back of an increased demand for automaker shares. Shanghai’s Composite (+0.41%) gained on steadying Yuan.
The US dollar was better bid against all of its G10 counterparts. The U.S. 10-Year yields advanced to 2.4486%, as the Philadelphia Fed’s Harker said there is a ‘strong case for March rate hike if the PCE (personal consumption expenditure) supports’.
Higher US yields particularly weighed on the yen (-0.41%) and the Antipodeans (AUD -0.23%, NZD -0.47%).
The AUD/USD rebounded lower from 0.7691 after the Reserve Bank of Australia (RBA) meeting minutes revealed rising concerns regarding the appreciation in the Aussie, which has recently benefited from the recovery in commodity prices. The RBA minutes stated that the steady rates are appropriate and warned of significant downside risks to the global growth due to Donald Trump. Despite a weak carry appetite, the sell-off in AUDUSD remained capped by the 3.76% rally in iron ore prices. AUDUSD resistance is eyed pre-0.7700, if broken could encourage buyers for a further rise to 0.7730 and 0.7775/0.7800 area. On the downside, a pullback below the 0.75 could encourage short-term buying interest, if the US yields fail their attempt for a positive breakout and the appetite in the US dollar steadies, or wanes.
The Dow Jones (+0.14%) and the SPX futures (+0.14%) were little changed as the US prepares to return from the President’s Day bank holiday, while the Nasdaq futures (+0.41%) were well bid in Asia. Recent researches warn that drying hedge fund liquidity could amplify a downside correction in the US stock markets.
Kraft Heinz Co (NASDAQ:KHC), which has rallied 10.74% on Friday, is set for a sharp downside correction after Unilever (LON:ULVR) rejected its $143 billion takeover bid over the weekend. Unilever NV (NYSE:UN) sold-off 6.56% in London on Monday.
In Europe, the single currency is subject to rising selling pressures due to the upcoming European election worries, the eventual rise of anti-European leader Marine Le Pen in France and Greek debt talks.
Today, the Eurozone’s January final inflation report and February preliminary manufacturing and services PMIs will be closely monitored. As the EUR/USD’s negative trend gains pace, upside attempts could be interesting top selling opportunities for trend traders, as long as the pair remains below the critical 100-day moving average resistance (1.0666). The key short-term support is eyed at 1.0520 (last week’s dip), before the 1.05 mark.
Cable trades rangebound before the Bank of England’s (BoE) inflation report hearings. BoE governor Mar Carney will testify on inflation and the economic outlook before Parliament’s Treasury Committee. Despite the recent rise in the UK’s consumer prices, the BoE Governor Mark Carney could talk down the rising inflationary pressures by insisting that the pressures on wages could ease, as the UK’s labour market nears the full-employment. If this is the case, we could see a pound recovery above the $1.25 against the greenback. The key resistance stands at $1.2575 (minor 23.6% retracement on post-Brexit decline).
The FTSE 100 index is poised for a softer open, as HSBC shares could weigh on the sentiment at the early hours of trading. Miners could diverge positively on the back of firmer oil and commodity prices.