HSBC met on profit and still fell 7%

HSBC’s shares fell nearly 7% on Tuesday and touched a six-month low, after third-quarter revenue missed estimates, partly because its wealth business grew more slowly¹. Pretax profit was in line with expectations². The bank index fell 1.1% and the FTSE 100 0.8% in the morning; the STOXX 600 was down 0.1% at 640.07 by 10:20 CET¹. By early afternoon it had edged up 0.1%².

Why a bank can earn and still disappoint. “Banks have been the winners of the latest quarter before this one,” said Ipek Ozkardeskaya of Swissquote Bank, but “short-term yields rising more than long term” is “eating into the income revenue”². That is the dull machinery behind the headline: a bank borrows short and lends long, and when the short end climbs faster, the margin narrows. No scandal, just arithmetic.

The rest of the ledger was better. Novartis raised its full-year guidance for core operating income and rose 1.7%¹. SIG Group, which makes packaging, jumped 9.4% after lifting its margin guidance¹. BE Semiconductor rose 8.5% after Applied Materials said it had raised its stake in the Dutch maker of chip-packaging equipment to 20%¹. “The earnings results, generally speaking, have been pretty solid,” said Richard Flax of Moneyfarm¹.

France, the quiet weight. French consumer confidence fell five points to 80 in October, its lowest since June 2013, as student protests spread to unions¹. French shares were flat after falling more than 2% last week¹.

For you, the lesson of the day is that one large company can move a headline and very little else. Results season is a long queue of invoices being added up: more than a third of S&P 500 companies report this week². Nothing here is investment advice.