RAMSEY CROOKALL & CO

EVENING REPORT 28 February 2011

The response to the results from banking powerhouse HSBC has been negative. The market had been hoping for pre-tax profits to break through the $20bn barrier, but they fell short by around a billion. The City was also displeased that the outcome of the group’s review of its target range for return on equity had been lowered by 3 percentage points at both ends to 12-15% now that the effects of new banking regulations are clearer.

Associated British Foods, the foods group that also owns the Primark clothing retailer, was lower after it said its interim results will be in line with market expectations, but warned that UK consumer demand is slowing and margins will be under pressure from rising cotton prices in the second half as well as the first.

Elsewhere, publishing giant Pearson is doing better. Profits before tax rose 28% to £670m from £523m the year before on sales that grew 10% to £5,663m from £5,140m in 2009. Revenue was up 8% using constant exchange rates, with growth seen in all of Pearson’s businesses (Education + 9%, Penguin +2% and the FT Group +12%).

Tesco has signed an agreement to set up a joint venture to develop shopping malls in China. Half of the joint venture will be owned by a consortium of leading Asian investors including Singapore's Metro Holdings.

Finally, Avis Europe is also lower. The car rental group made more in 2010 than it had done for five years and further progress is on the cards for 2011. Underlying profit before tax increased 45% to €51m on group revenue up 9% to €1.52bn. Rental income was up 3% at €1.2bn.

THE FTSE 100 CLOSED DOWN 7 @ 5994

THE DOW JONES AT 4.30 IS UP 65 @ 12,196

THE NASDAQ COMP AT 4.30 UP 8 @ 2789

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