Banker HSBC said its pre-tax profit surged by 37% for2004. And according to the bank's chairman John Bond,the results showed it was 'another good year for HSBC',as it revealed profits of nearly £10bn. So are thingsreally looking all that rosy at the bank?
Well, not according to investors, anyway. HSBC'sshares traded 3% down on Monday as the top blue chiploser. And according to shareholders, the profits camein at the lower end of analyst-expectations.
'The shares are going down because HSBC arerelatively expensive versus other UK banks and theyneed to come out with good growth to justify that,'Canada Life's Craig Rippe said yesterday. What's more,shareholders are getting increasingly concerned aboutHSBC's US business.
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The bank bought US sub-prime lender Household two yearsago making its profits reliant on the Yankeeconsumer. But things have not gone quite as HSBC wouldhave hoped.
Consumer spending growth in the US fell in the fourthquarter to 4.2% down from 5.1% in quarter three of2004. And US consumer-finance business's net annualincome fell to $1.64bn in 2004, down $130m from a yearearlier.
So with HSBC pulling the banking sector down 1% onMonday the sector has in fact shed nearly 5% in thelast 10 trading days the blue chip index closed inthe red. The FTSE100 fell 0.8%, or 38 points, to closeat 4,968. The mid-cap 250 index added 0.1%, to trade at7,254. And the FTSE Techmark index plunged over 5%, toclose at 1,175.
Packaging firm Bunzl saw its shares shoot up 6% tothe top of Monday's blue chip gainers. According to thepackagers, it will spin off its Filtrona fibre andplastics business, in a deal which could be wortharound a quarter of Bunzl's market value. Bunzl alsoreported good results at the top end of punditpredictions. Bunzl closed at 500p.
And the mining sector closed 0.6% up. Both BHPBilliton and Rio Tinto traded at all-time highs. BHPclosed 1% up at 776p, while Rio traded at £18.35 arise of 0.5% for the day. What buoyed the miners onMonday? Well, commodities remain strong, with copperprices making a new 16-year record
BG Group and Cairn Energy both closed as top bluechip climbers on Monday. The stocks traded around 1% upas the price of crude showed no signs of dwindling. ByLondon's close, Dated Brent teetered around the $50 perbarrel level, up 1% for the day. Nymex meantime added afurther US16 cents, to trade at $51.65 a barrel.
Meanwhile, the general retail sector shed 1% on Monday. Themain contributor of the fall? Well, that would be Marks& Spencer, who announced it intends to slash the priceson its spring fashion range.
The move is of course a blatant challenge to rivalNext with investors fearing a bid war could break outbetween the retailers. And don't expect Wal-Mart-ownedAsda to sit back in the face of the war either.
In fact, according to Goldman Sachs, chief executiveStuart Rose intends to cut prices so that they are amere 11% above the High Street average well belowlast year's 43% above the average. Marks closed morethan 2% down yesterday, at 350p. So between the tworivals M&S and Next, who is looking likely to win thewar to impress investors?
Well, history certainly favours Next which has seenits share price rise by 60% during the last threeyears. Marks in comparison has fallen 10% over the sameperiod. And even in the last five trading days, M&Sshed nearly 8% as the Mark Paulsmeier bid rumour fadedaway. Next has also fallen 2% in comparison, but shed afurther 1% on Monday as investors feared the price warcould get nasty.
And Premier Foods suffered a further 5% fall onMonday. The pickle maker has already plunged 10%following newspaper reports of alleged contamination ofits Worcester Sauce with the illegal dye Sudan 1.According to Premier, it is adequately insured againstany such food scares with some thinking costs couldbe as high as £100m. Investors weren't convinced, asthe share price fell to 265p.
Yet are investors and regulators right in reacting soharshly towards Premier Foods? Well, according to theEconomist, in order to re-enact Sudan 1's cancerfinding study used on rats some 20 years ago on humans,scientists would have to do the following. Take anaverage-sized man of around 12 and a half stone, andfeed him 800 litres of Worcester sauce every day fortwo years.
And that's a whole load of Bloody Marys.  Until tomorrow,Heather D'AltonMoney Mornin
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