London open: Stocks fall as HSBC, Glencore weigh

London stocks fell in early trade on Wednesday, led lower by HSBC and Glencore after results, as investors mulled the latest UK borrowing figures.

At 0855 GMT, the FTSE 100 was down 0.7% at 7,668.50.

Data released earlier by the Office for National Statistics showed that the UK posted its largest budget surplus for the month of January since records began in 1993, at £16.7bn.

This exceeded the £7.5bn surplus in January 2023, but was smaller than consensus expectations of £18.5bn and the Office for Budget Responsibility’s Autumn Statement forecast of £18.2bn.

For the first 10 months of the year, government borrowing came in at £96.6bn, lower than the OBR’s official forecast of £105.8bn.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The government recorded a record budget surplus in January as the end of the energy support scheme and lower debt interest payments boosted coffers. January is a big month for tax receipts especially with the self-assessment deadline, but lower expenditure has put the finances on firmer footing.

"A large surplus was expected however, so it’s not going to move the dial much on wiggle room for pre-election sweeteners. However, coming hot on the heels of the assessment by the Bank of England that the UK recession will turn out to be super-mild, it does offer more rays of optimism. The Bank of England Governor Andrew Bailey, speaking to MPs, suggested the economy may already have turned a corner, adding that he is comfortable with market assessments that interest rate cuts will come this year. Relief is simmering that there could be light at the end of the tunnel for sectors hit hard by cost-of-living headwinds."

In equity markets, HSBC tumbled as it posted a record jump in annual profits and announced a $2bn share buyback but missed forecasts as it was forced to take a $3bn hit from its exposure to a Chinese bank.

The Asia-focused lender said full-year pre-tax profit rose 78% to $30.3bn driven by high global interest rates, but it was below the $34.1bn average estimate of brokers compiled by the bank. However it also took a $3bn impairment on the its stake in China's Bank of Communications.

Glencore fell as it reported a halving of its full-year adjusted earnings before interest, tax, depreciation and amortisation amid lower commodity prices.

BAE Systems was also in the red despite posting better-than-expected full-year profits and saying that sales would grow further this year as the rise in geopolitical tensions drove increases in military spending by governments.

Cybersecurity firm Darktrace tanked after US peer Palo Alto Networks tumbled on Tuesday as it cut its full-year guidance.

On the upside, Barclays rallied for the second day in a row as investors continued to cheer the bank’s strategy overhaul.

Market Movers

FTSE 100 (UKX) 7,668.50 -0.66%
FTSE 250 (MCX) 19,114.50 0.03%
techMARK (TASX) 4,362.44 -0.23%

FTSE 100 - Risers

Barclays (BARC) 164.56p 1.71%
St James's Place (STJ) 664.80p 1.68%
Beazley (BEZ) 582.50p 1.57%
JD Sports Fashion (JD.) 113.70p 1.34%
Burberry Group (BRBY) 1,323.00p 1.19%
Endeavour Mining (EDV) 1,311.00p 1.08%
Diageo (DGE) 2,998.00p 1.06%
NATWEST GROUP (NWG) 231.20p 1.05%
Halma (HLMA) 2,304.00p 0.96%
Convatec Group (CTEC) 244.20p 0.83%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 599.80p -6.83%
Glencore (GLEN) 370.50p -5.10%
BAE Systems (BA.) 1,228.50p -1.96%
Airtel Africa (AAF) 92.25p -1.60%
Centrica (CNA) 131.50p -1.42%
Rio Tinto (RIO) 5,160.00p -1.34%
Flutter Entertainment (DI) (FLTR) 16,425.00p -0.99%
GSK (GSK) 1,663.40p -0.86%
Entain (ENT) 915.40p -0.82%
Smith (DS) (SMDS) 321.70p -0.77%

FTSE 250 - Risers

Spirent Communications (SPT) 117.20p 4.18%
PZ Cussons (PZC) 102.80p 2.59%
Savills (SVS) 979.50p 1.82%
C&C Group (CDI) (CCR) 157.40p 1.81%
Bank of Georgia Group (BGEO) 4,320.00p 1.77%
Bytes Technology Group (BYIT) 612.00p 1.75%
AJ Bell (AJB) 323.20p 1.64%
Plus500 Ltd (DI) (PLUS) 1,778.00p 1.60%
Wood Group (John) (WG.) 147.80p 1.44%
Quilter (QLT) 103.80p 1.37%

FTSE 250 - Fallers

Darktrace (DARK) 330.40p -8.22%
Urban Logistics Reit (SHED) 119.40p -4.94%
Apax Global Alpha Limited (APAX) 151.00p -1.95%
Victrex plc (VCT) 1,324.00p -1.85%
Close Brothers Group (CBG) 347.00p -1.70%
4Imprint Group (FOUR) 5,480.00p -1.62%
Workspace Group (WKP) 495.00p -1.59%
Impax Environmental Markets (IEM) 381.50p -1.42%
Tate & Lyle (TATE) 610.00p -1.29%
Supermarket Income Reit (SUPR) 76.30p -1.29%