By Johann M Cherian
(Reuters) -UK’s FTSE 100 fell on Tuesday as a sharp drop in the shares of Europe’s largest bank HSBC following a slide in profit dented optimism sparked by Rishi Sunak’s victory in the race to become the new prime minister.
HSBC’s shares tumbled 6.9% after the lender’s third-quarter profit slumped 42% and it named Georges Elhedery as its new chief financial officer in a surprise shift. The stock pulled the broader UK’s banking index down 4.2%.
“Concern about the impact of a slowing economy on bad debts and growth in the loan book is being exacerbated at HSBC by the departure of well-respected finance director Ewen Stevenson,” said Danni Hewson, financial analyst at AJ Bell.
“Stevenson’s departure may also make HSBC more vulnerable to pressure from its largest shareholder Ping An to break up the bank.”
The blue-chip FTSE 100 fell 0.4% after closing at its strongest level in over two weeks on Monday, while the domestically oriented FTSE 250 added 0.2%.
Sunak will be appointed prime minister by King Charles on Tuesday, replacing Liz Truss, who lasted only six weeks in the job after her economic programme sparked panic in financial markets.
A recovery in gilts and a rising pound suggested a sense of calm had washed over markets. Jeremy Hunt is expected to remain the finance minister and could present a new budget on Oct.31.
“The market is anticipating the corporate profit tax to be increased slightly or suspended for a time given the situation now,” said Daniel Kostecki, senior market analyst at Conotoxia Ltd.
Among other stocks, online retail platform THG jumped 15.6% after it reiterated full-year forecast, and said it has made a positive start to the fourth quarter.
(Reporting by Johann M Cherian in Bengaluru; Editing by Dhanya Ann Thoppil and Sriraj Kalluvila)
