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The FTSE 100 dropped as HSBC's poor results dragged the index lower
Reuters
The FTSE 100 was the only major stock index in Europe to lose ground on Tuesday as shares in Europe's biggest bank by assets, HSBC tumbled after it dropped a troubling set of results.
HSBC said on Tuesday that profit before tax for 2016 fell to $7.1 billion from $18.87 billion in the previous year. That compared with the average analyst estimate of $14.4 billion.
The 2016 profit reflected a $3.2 billion impairment of goodwill in its global private banking business in Europe and the impact of its sale of operations in Brazil, the bank said in a statement to the stock exchanges.
As a consequence of the poor results, shares in the bank dropped like a stone as European markets opened and stayed there for the rest of the day. At the close, HSBC was down 6.54% to £6.657 per share.
Here is the chart:
Investing.com
Despite Tuesday's blip, HSBC's shares have been among the best-performing European bank stocks since Britain voted in June to leave the European Union, climbing 53% against a 28% increase in the STOXX Europe index of 600 banks as the bank benefited from appreciation of the U.S. dollar. The bank also has substantially less exposure to British assets than the likes of Barclays, Lloyds, and RBS.
HSBC's fall on the day had a disproportionate impact on the FTSE 100 as it makes up roughly 7% of the index. The index was also dragged lower private hospitals group Mediclinic, which lost 6.4% after being downgraded by analysts at investment bank Jefferies.
In the broader European markets, stocks were significantly higher thanks to a set of much better than expected PMI day from IHS Markit. "The pace of eurozone economic growth improved markedly to hit a near six-year high in February," the firm said in a release.
Germany's DAX had the best day of any index, climbing more than 1%, while other bourses saw gains between 0.3% and 1%.
Here is the scoreboard across the continent:
Investing.com
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