Here’s Why the FTSE 100 Sell-Off is Accelerating Today – HSBC

Summary:
• The FTSE 100 sell-off is accelerating today as investors react to the weak earnings from HSBC, the biggest bank in Europe after it reported weak earnings

The FTSE 100 index is under pressure today as traders reflect on the weak performance by HSBC. The index is down by 0.30% and is trading at £5,885, which is slightly below the June’s high of £6,515. Other indices in Europe are in the green, with the DAX index rising by 0.60% and Stoxx 50 climbing by 0.35%.

HSBC share price fall

As I wrote in our morning brief, HSBC share price was the worst-performing in the Hang Seng index. The same trend is happening in the UK, where the shares have declined by almost 4%. The decline is mostly because of the bank’s weak earnings for the second quarter.

In total, the biggest bank in Europe said that its provisions for bad loans increased to $3.8 billion in the quarter. In 2019, the provisions were just $555 million. As a result, the pre-tax profit for the quarter declined by 82% to $1.1 billion. Also, the bank warned that its bad loan provisions could rise to $13 billion this year.

HSBC share price has also been under pressure because of its strong support for the China’s national security law.

As a result of its weak earnings, other banks shares also fell. Lloyds share price declined by 0.72% while NatWest share price dropped by more than 1.42%. Standard Chartered stock declined by 1.53%.

Other top movers in the FTSE 100

In addition to HSBC and other banks, the other laggards in the FTSE 100 are Rolls Royce, Whitbread, British Land, and Standard Life Aberdeen. All these shares are down by more than 1%. On the other hand, the top movers in the FTSE 100 are Fresnillo, Just Eat Takeaway, Ashtead, and Scottish Mortgage Investment Trust. All these shares are up by mote than 1%.

FTSE 100 technical forecast

The daily chart shows that the FTSE 100 index is in its third straight day in the red. The index is trading at 5,885, which is now below the 50-day and 100-day exponential moving averages. Also, the price is below the ascending trend line that is shown in green. At the same time, the RSI has started moving lower and is currently at 33. Therefore, it seems as if the bears have taken over, which means that the index will continue falling. If it does, the next target will be the 23.6% retracement level at 5,400.

On the flip side, a move above 6,187 will invalidate this trend. This price is the index’s highest point on Thursday last week.

FTSE 100 forecast