HSBC, Games Workshop and International Consolidated Airlines

“The FTSE 100 is on track to finish the week on a positive note, rising approximately 0.3% over the five trading days to 7,521. Next week’s main events include the Bank of England’s UK interest rate decision,” says AJ Bell Investment Director Russ Mould.

HSBC

“A disappointing first quarter reporting season for UK banks concludes with an underwhelming release from the biggest of them all, HSBC.

“The shares trade materially lower as new chief executive John Flint gets off to a shaky start, reporting a surprise fall in pre-tax profit. Consensus expectations were for a solid increase in profit, and a $2bn share buyback programme is not sufficient to keep the market on side.

“The first quarter update includes a 13% increase in operating expenses, reflecting investment in Chinese and UK retail banking operations.

“Investing to lay the foundations for future growth is a solid strategy and if this spike in costs is a one-off then investors may be forgiving. However, if second quarter numbers also show a surge in expenses then HSBC could be in for rougher treatment.”

Games Workshop

“Ten years ago it would have seemed unimaginable that Games Workshop would end up a FTSE 250 company. Interest in tiny fantasy figures had waned following a strong period inspired by the success of the Lord of the Rings films. It battled profit warnings rather than miniature warlords.

“A decade on and its share price has increased more than 12-fold and the company is sitting in the prestigious mid-cap stock market index. It now tells investors that current financial year profits are slightly above expectations, giving another lift to its share price.

“The business has struck a chord with a new generation of fantasy fans and is engaging with customers via multiple channels. While Warhammer figures may not be to everyone’s taste, Games Workshop has proved that it is possible to be a retail success if you know how to connect with your market and have the right products and superior service levels.”

International Consolidated Airlines

“Investors probably shouldn’t get carried away with ahead of expectations first quarter results from British Airways’ owner International Consolidated Airlines.

“The multi-airline group benefited from two external factors in the period which flattered the numbers – namely helpful currency movements and the timing of the Easter holiday.

“Judging a business on its quarterly performance, good or bad, is never that helpful and full year guidance for profit growth – so long as exchange rates and fuel costs remain stable – is not hugely inspiring.

“With these numbers out of the way attention is likely to switch to a potential takeover of low-cost airline Norwegian Air Shuttle. IAG bought a 4.6% stake in April.

“Chief executive Willie Walsh would not be drawn on a potential takeover this morning, but it emerged yesterday that his company’s largest shareholders, Qatar Airways, are supportive of a deal.”

These articles are for information purposes only and are not a personal recommendation or advice.