FTSE 100 watch: Footsie inches lower after downbeat services data

on Aug 3, 2016
Updated: Mar 11, 2020

The UK benchmark index has fallen marginally into the red in today’s session, following downbeat economic data in the wake of the Brexit referendum. HSBC Holdings (LON:HSBA) and Standard Chartered (LON:STAN), however, have rallied today after posting their respective half-year results.

As of 12:23 BST, the FTSE 100 had lost 18.56 percent to stand 0.28 percent lower at 6,626.84. Sentiment has been subdued today after Markit said that the UK business activity index had fallen to 47.4 last month, from 52.3 in June, signalling a fall in UK services output, and marking the first contraction since December 2012.
“The PMI [purchasing managers’ index] is already deep into territory which would normally spur the Bank of England into taking action to stimulate the economy,” Chris Williamson, chief economist at Markit, commented in a press release, adding that “a quarter-point cut in interest rates therefore seems to be a foregone conclusion at tomorrow’s Monetary Policy Committee meeting”.

Losses in the Footsie, however, remain limited, with heavyweight HSBC’s shares having added 3.87 percent to 501.50p after the Asia-focused bank announced a special dividend, even as it posted a drop in first-half profits.
“This reflects the decision by management to return half of the capital gain generated from the disposal of the group’s Brazilian operations … (but it) has dropped its progressive dividend policy,” Shore Capital analyst Gary Greenwood said, as quoted by Reuters. “So while giving with one hand, (the) management is at the same time taking away with the other.”
Standard Chartered’s shares meanwhile have jumped 6.12 percent to stand at 625.70p, after the bank returned to profit in the first six months of the year, as compared with a loss in the second half of 2015.
**The FTSE 100 was 0.21 percent down at 6,631.49 points as of 12:42 BST on Wednesday, August 3, 2016.**
As of 12:55 BST, Wednesday, 03 August, HSBC Holdings plc share price is 501.75p.