However, an analysis on the HSBC share price suggests that further downside in the stock is likely to remain limited for now.
No joy for shareholders in HSBC Holdings plc (LON:HSBA) today; the stock is trading 1.1 pct lower having reached 628 on Tuesday morning.
HSBC shares were hit hard despite the firm announcing a pre-tax profit increase of 9% yesterday, and overall earnings that were the highest since the onset of the financial crisis in 2007.
But the headline figure of $22.6bln came in some $2bln below analysts’ expectations and the shares responded accordingly, ending a volatile session with a loss of 2.8%.
According to an analysis of the stock from Bill McNamara at Charles Stanley, the decline appears to be technically significant since it confirms the reversal in the face of downtrend resistance that began last week:
"Although they closed above the lows of the session the outlook is not particularly promising at this point In fact, the low of the day was 617p, at which point the trough that was reached earlier this month was successfully tested – and that price action implies that downside is likely to be limited in the near term.
"All the same, there is little in the chart to suggest that a sudden push higher is imminent. Hold for now."
Today's market update
European equities are set to start the day with a modest pull back as traders turn cautious over recent gains.
"Despite the bullish slant to sentiment, traders are wary about these levels as it was only a month ago that we were on the same trajectory when all of a sudden emerging market jitters became a prominent issue and slammed the bulls to the floor," says Jonathan Sudaria at Capital Spreads.
Recent data has been mixed but the bulls have been quite content to shrug off the negative and rally on the positive.
"However, as markets teeter around new highs again bulls will be looking over their shoulders for any geopolitical risks hurtling towards them. With alleged reports that Russia is beefing up its military presence at Sevastopol, maybe traders have a sense for trouble in Crimea?" says Sudaria
A rally in US healthcare stocks drove the Dow Jones 92 points higher yesterday to 16,205, a level which denies almost completely the sharp selloff seen at the end of January.
Sudaria reckons Investors seem more at ease about the US economy being healthy enough to sustain stimulus cuts and for now are willing to focus more on the positive side of the mixed data.
Although it tried to push higher in early trading, the euro finished near flat at 1.3735 against the US dollar on worries about inflation outlook in the common area. The data showed consumer prices remaining below 1% and the ECB already promised it stands ready to add extra monetary stimulus to address the issue especially when its mandate focuses on price stability.