Daily market update: HSBC, Taylor Wimpey, BAE Systems

“Investors got out of the wrong side of the bed, judging by the negative reaction to the latest round of corporate earnings,” says Russ Mould, Investment Director at AJ Bell.

“While certain stocks fell for good reason such as HSBC and Taylor Wimpey amid negative news, there were plenty of other big stocks like BAE Systems and GSK who couldn’t get a break despite positive messages in their results.

“BAE fell 2.3% despite upgrading 2025 guidance for sales and underlying earnings before interest and tax. Investors might not have liked the news it expects to buy back fewer shares following a strong run, nor the fact its earnings per share guidance has been left unchanged. Investors have lofty expectations for all defence stocks and they might have been banking on a significant upgrade to earnings guidance. Without that catalyst, the shares are vulnerable to a bout of profit taking.

“A lot could happen over the next three days to either excite or disappoint the market. Data on the state of the US economy will show if Trump’s tariffs have caused upset domestically. Soon after, we’ll get the latest US interest rate decision.

“The Fed isn’t expected to change rates but the market will analyse the accompanying commentary for signals on what could happen next.

“The central bank will certainly be watching jobs data on Friday like a hawk, and that result will feed into its future monetary policy decisions.

“All the while, we’ve got four of the Magnificent Seven mega cap US tech stocks reporting over the next two days. They have the power to move markets and any signs of weakness could damage investor sentiment.

“By Friday night, investors will have a veritable feast of data points and financial results that could help shape their portfolio positioning for the rest of the year.

“US stocks remain expensive and will need a silver plate of good news to keep the market moving higher.”

HSBC

“HSBC has once again missed earnings expectations, this time dragged down by a $2.1 billion charge on its stake in a Chinese lender. It has also stomached extra costs linked to restructuring efforts as relatively new chief executive Georges Elhedery wields the axe across the business.

“The result means it has now fallen short on earnings expectations for five out of the past six quarters.

“The banking group was already exiting certain regions when Elhedery took over, and he’s now tightening the screws and focusing on areas where he thinks HSBC will do best.

“Once declaring itself ‘the world’s local bank’, HSBC has recognised that it cannot be a giant on a global basis. Instead, it is now concentrating more on Asia and the Middle East.

“While there is logic to this strategy, repositioning HSBC is not a simple task given its size and scale. There are also challenges in its priority regions such as property market weakness in Hong Kong and mainland China. It means investors must continue to brace themselves for setbacks in its results well into 2026.”

Taylor Wimpey

“Housebuilders are pulling their hair out at the constant setbacks clouding their industry.

“Thousands of people want to get on the property ladder, the government wants more homes built, and mortgage rates are generally trending lower, so why is it that housebuilders can’t deliver good news? It’s down to non-stop negative issues that have tripped up earnings progress and affordability still being a problem.

“Taylor Wimpey is the latest to disappoint the market, with half-year earnings going up in smoke thanks to a series of one-off factors. Charges linked to fire safety and a settlement linked to a competition watchdog investigation have led Taylor Wimpey to move from a profit to a loss.

“Even without those factors, life is still an uphill battle. Average selling prices fell in the first-half and recent trading has seen a decline in its net private sales rate. Build cost inflation is still an issue yet Taylor Wimpey is confident of lifting its operating profit margins. Investors aren’t buying this optimism given the 5% slump in its share price on the news, putting the stock at its lowest level in two years.”