Lloyds leads FTSE 100 higher as HSBC drops after profit slump
London-listed stocks jumped on Monday, with the FTSE 100 up 2.3% led by banking and finance names such as Lloyds Banking Group finishing 6% higher and NatWest Group up 4.8%. The gains came amid the news that rival HSBC is planning to accelerate its plans to cut 35,000 jobs as the pandemic has decimated its profits. HSBC stock closed the day 2.9% lower after the news came out as part of an earnings report, in which it said profits in Q2 2020 were 80% down on the prior year. The bank was the biggest loser in the FTSE 100, and the only stock to close the day more than 1% lower. In the FTSE 250, small cap favourite Games Workshop helped take the index to a 1.3% daily gain, after adding 5.9% itself. The gaming miniatures maker has added 53% year-to-date, buoyed by a loyal fan base that has largely been stuck at home for months. Over the past 12 months, the stock is up 110%.
- FTSE 100: +2.3% Monday, -20% YTD
- FTSE 250: +1.3% Monday, -21.6% YTD
What to watch
The Walt Disney Company: It has been a mixed year for Disney stock. On one hand, the company is dealing with theme park shutdowns and disruptions to the production of its film and television content, but it has also brought a streaming service to market during a period where such services are being used heavily. Disney+ has already attracted more than 50 million subscribers, and progress there will be a key part of the firm’s quarterly earnings report today. Plans for theme park reopening, and progress on getting back to normal operations in regions where reopenings have begun, will also be key features of the earnings call. Disney stock is down close to 20% year-to-date, and Wall Street analysts are split between buy and hold ratings.
Activision Blizzard: As publisher of the hugely popular Call of Duty franchise, the latest iteration of which has proved a major hit, Activision Blizzard has been a beneficiary of widespread lockdowns. Its share price has jumped more than 40% year-to-date, and is up by 84% over the past 12 months. How the company plans to sustain growth as Americans return to work and have less time for video games, plus the share of the company’s sales that happened digitally, will be key features of its Tuesday earnings report. Analysts overwhelmingly favour a buy rating on the stock.
Legal & General: London-listed insurer and asset manager L&G delivers its quarterly earnings report on Wednesday, where the sustainability of its dividend – which is now at 8% – is likely to be a key focus. The company’s share price is down 27% year-to-date, similar to many financial names, as rock bottom interest rates make it far harder for the company to turn a profit. Currently, the firm is trading at a trailing twelve month price-to-earnings ratio of just seven, roughly half the average ratio for the broader market.
Crypto corner: First Swiss Bank opens to crypto operations
Swiss Banks may be better associated with taking care of the offshore needs of the ultra-wealthy, but now one bank is set to begin the country’s first crypto banking operation. according to Finews.
Swiss cantonal bank Basler Kantonalbank (BKB), a state-run entity, has become the first in the country to begin developing cryptoasset operations. BKB’s subsidiary Bank Cler is reportedly working on offering services that allow customers to trade and store cryptoassets. Cler is owned by BKB but it holds a separate banking licence.
Although BKB did not specify which cryptoassets it would provide services for, a spokesperson confirmed it was going ahead with plans thanks to increased demand for such services. While there is no timeline for Swiss customers to access the services yet, it will be the first cantonal bank to offer such services in Switzerland, where currently only crypto banks Seba and Sygnum operate.
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