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HSBC joins the party

Today's half-year results from HSBC have been well received by the markets despite a 50% fall in profits compared to this time last year. The £3 billion pre-tax profit compares to the £6 billion figure announced this time last year but was actually ahead of many analyst forecasts. While the company decided to issue a cautious and uncertain statement regarding the UK economy, and the worldwide economy, shares in HSBC immediately soared by 7% to hit an eight-month high.

The performance across the board was fairly mixed with HSBC's investment banking business more than doubling profits, commercial banking increasing by 48% although the personal finance services division saw a £700 million loss against a profit of around £1.4 billion last year. The news of improved trading conditions is just the fillip that the UK markets and UK investors required and so far they have responded in a positive manner. But is this the end of the downturn?

While recent comments from elements of the UK banking sector, the government and some analysts have been more than upbeat as regards the UK economy, the full impact of the downturn will not be felt for some time yet. UK businesses are struggling, UK consumers have debt levels higher than ever before and the UK national finances are in a mess. There is light at the end of the tunnel but there is still some way to go.

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