HSBC down on profits report

European equities markets plunged Monday as banks fell after HSBC (LSE: HSBA; NYSE: HBC; Euronext: HSBC; SEHK: 005) said its profits dropped 62 percent last year and said that it will have to raise more capital.

In London the FTSE 100 saw its lowest close in six years as it fell 5.33 percent to 3,625.83 while the FTSE 250 dropped 3.12 percent to 5,860.46.

HSBC had the worst day on the 100 after its report, falling 18.78 percent, with Lloyds Banking Group (LSE: LLOY) close behind with a decline of 15.27 percent.

The real estate sector was down on a Bank of England report that mortgage approvals remained at 31,000 in January, the same level as in December and fewer than had been expected.

Developer Brixton (LSE: BXTN) dropped 26.45 percent, turning in the worst performance on the 250, while over on the 100 British Land (LSE: BLND) dropped 12.62 percent.

Miners and the oil sector were lower as commodities prices fell, while insurers were lower after US insurer American International Group (NYSE: AIG) said it lost $61.7 billion in the fourth quarter, the biggest quarterly loss by any corporation in US history, and was slated for $30 billion more in government bailout money.

Old Mutual (LSE: OML; JSE: OLOML) was down 12.05 percent on the session.

The FTSE Eurofirst 300 was down 5.16 percent to 682.31, its lowest close in six years and only a point above its all-time low, while the Dax fell 3.48 percent to 3,710.07, the CAC-40 was 4.48 percent lower to 2,581.46 and the IBEX dropped 4.6 percent to 7,270.5.

The CAC-40 had only two winners on the session while utility EDF (Euronext: EEN) was the biggest decliner as it dropped 9.45 percent.

Elsewhere in the utilities sector, Eon (FWB: EOA; LSE: EON; NYSE: EON) was down 5.73 percent and RWE (FWB: RWE) was 6.9 percent lower.

Commerzbank (FWB: CBK) was the biggest loser on the Dax, dropping 7.35 percent, joining other European banks in losses, while chipmaker Infineon (FWB: IFX; NYSE: IFX) led the four winners on the Frankfurt index as it added 5.26 percent.

Asian markets were also lower on concerns that the recession is getting worse, with sentiment hurting exports from the region.

In Tokyo, the Nikkei 225 was down 3.81 percent to 7,280.15 while the Topix index fell 2.92 percent to 734.59 and the Mothers market dropped 1.68 percent to 292.23.

Banks were lower in Tokyo as Mizuho Financial Group (TYO: 8411; NYSE: MFG) fell 3.7 percent, Sumitomo Mitsui (TYO: 8316) was down 5.7 percent and Mitsubishi UFJ (TYO: 8306; NYSE: MTU) dropped 6.8 percent.

Exporters were hurt by concerns regarding the state of the US economy and a stronger yen, while general sentiment was hurt by a report from Tokyo’s Labor Ministry that Japanese wages were 1.3 percent lower in December 2008 from the same month in the previous year.

In Australia, the Sydney Ordinaries fell 2.82 percent to 3,203.8 while the S&P/ASX200 was down by the same percentage to 3,250.1, while in Taipei the Taiex was 2.88 percent lower to 4,425.83, the Sensex dropped, 3.2 percent to 8,507.08, the Straits Timex Index was down 3.85 percent to 1,533.4, the Hang Seng was 3.86 percent lower to 12,317.46 and the Kospi dropped 4.16 percent to 1,018.81.

The exception to the declines was the Shanghai Composite, which added 0.51 percent to 2,093.45.

At just before 2 p.m. in New York the Dow Jones Industrial Average had fallen 3.24 percent to 6,833.94 while the Nasdaq Composite was down 3.2 percent to 1,333.72 and the S&P 500 had dropped 3.82 percent to 707.01.

The Dow fell below the 7,000 level for the first time since 1997 after the news from AIG and has now lost half its value in less than a year and a half.

Despite posting the largest quarterly loss of any corporation in US history, AIG was 8.29 percent higher in afternoon trade in New York.

Banks were lower, however, on general economic concerns, the announcement of another round of government bailout money for AIG, and on the situation at UK bank HSBC.

JPMorgan Chase (NYSE: JPM) was down 5.51 percent while Wells Fargo (NYSE: WFC) fell 10.08 percent and Bank of America had dropped 11.9 percent.

Story link: HSBC down on profits report