FTSE 100 Live: “There is a broader problem” - US stocks fall and London hits 4-month low on bank jitters
A relief rally at the move by Wall Street lenders to support First Republic Bank faded into the start of US trading, with concern at the wider problems in the banking sector stoking a sense of caution.
iCapital Chief Investment Strategist Anastasia Amoroso warned of a system issue in the US banking system unearthed by the collapse of Silvergate and Silicon Valley Bank. She told Bloomberg: “I don’t think those are idiosyncratic issues -- I think there is a broader problem.”
The FTSE 100 turned round from earlier gains to fall overall at the end of a a turbulent week of stock market trading.
Fund managers and insurers were among the biggest fallers, outweighing support from miners and oil stocks led today’s rally amid improved confidnce in the economic outlook.
FTSE 100 Live Friday
European stock gauges touch day-lows as Wall Street falls
Watchdog warns over impact of health tech deal
“There is a broader problem” says iCapital Chief Investment Strategist
FTSE 100 closes down 76 points
16:34 , Simon Hunt
The FTSE 100 closed doqn 76 points to 7,334, ending a torrid week for the blue-chip index which has seen it plunge to four-month lows amid turmoil in the banking sector.
James Knightly, Chief International Economist at ING said: “It has been a remarkable few days in financial markets.
“As recently as 7 March, Fed Chair Jerome Powell opened the door to a 50bp rate hike, citing concerns that “unacceptably high” inflation could last for longer given the tightness of the jobs market. Just two days later and troubles at Silicon Valley Bank prompted fears of contagion and turmoil, leading to a collapse in rate hike expectations for both the 22 March FOMC meeting and the future path of interest rates. In fact, from pricing 100bp of cumulative hikes, we were looking at a potential 75bp of cuts by the end of the summer at one point.”
“For a long time, we have been on the more dovish end of expectations for interest rate moves in 2023. The concern was that this has been the most aggressive monetary policy tightening cycle for 40 years and by going harder and faster into restrictive territory you naturally have less control over the outcome.
“In such an environment we need to be alive to the risk of economic and/or financial stress and Silicon Valley Bank is a clear example of this. SVB and the failure of Signature Bank could be viewed as special cases but Credit Suisse’s woes are intensifying the nervousness that is rippling through the industry.“
Fall on FTSE 100 gathers speed taking the main London index to four-month low
15:06 , Michael Hunter
It’s looking like a bleak end to a turbulent week for London’s main stock index.
The FTSE 100 is falling further in afternoon trade after investors resumed selling banking stocks, wiping out an earlier rally for the sector, as general worries about the sector took over from specific relief at the rescue of First Republic Bank in the US.
A more bearish mood kicked in toward the start of US trade and took hold as American stock markets in the Wall Street morning.
By the mid-afternoon in the City, the FTSE 100 was down by 95 points, or 1%, to 7314.95, a drop of over1.3% to a four-month low. Th decline was also broad, with only 10 of its constituents not showing declines for the day. Most of them featured defensive properties, including precious metals miner Frenillo, up 11p to 709p and cigarette maker Imperial Brands, which lit up the leaderboard with a 21p rise to 1883p, up 1%.
FTSE 100 banks take a hit with financial stocks back under global pressure
14:28 , Michael Hunter
London’s banking and financial stocks were drawn into a global sell-off in the sector that resumed with the start of US trade, wiping out earlier gains and leaving the FTSE 100 under pressure at the end of a fraught week.
Intermediate Capital, the asset manager, was the biggest single faller on the index – down almost 6% at 1155p, a drop of 6% – with Abrdn down by 10p, or nearly 5% at 201p. HSBC, the rescuer of Silicon Valley Bank’s UK arm, fell 3% to 542p, a loss of 3%.
Overall the FTSE 100 was down 60 points at , 7,350.19, a drop of 0.8%.
European stock gauges touch day-lows as Wall Street falls
14:02 , Michael Hunter
With banking stocks back under pressure, the Europe-wide Stoxx 600 index hit its lowest level of the day.
After a turbulent week on the markets with pressure centred on financial companies, worries about the next phase of potential problems set the tone to trade. The concern took over from a sense of relief after the recent spate of rescues, from America’s SVB Bank and its UK arm to First Republic Bank in the US and Credit Suisse in Europe, which was back under pressure this afternoon after securing a backstop from Switzerland’s central bank this week.
S&P 500 falls in opening US trade with banks back under pressure
13:38 , Michael Hunter
The relief rally among US banks after the rescue of First Republic Bank ended in opening New York trade, with financial stocks back under pressure as attention shifted to the sectors broader problems from the specifics of the lasest rescue.
Amid a cautious feel to trade, the S&P 500 shed around 15 points to 3,945.70, a decline of 0.4%. First Republic Bank itself was the biggest single faller, with its shares down by over 20%. There were declines of around 3% and 4% for other regional lenders and national names from the sector.
Among them, US Bancorp was down 4% and Bank of NY Mellon fell 3%.
“There is a broader problem” says iCapital Chief Investment Strategist
13:27 , Simon Hunt
iCapital Chief Investment Strategist Anastasia Amoroso says there is a system issue in the US banking system unearthed by the collapse of Silvergate and Silicon Valley Bank which suggests it didn’t face wholly unique problems.
She told Bloomberg: “I don’t think those are idiosyncratic issues -- I think there is a broader problem.
She added: “There are some very specific things that went wrong at those two banks but ...this is systemic, or at least it’s broad-based and that’s why the market is having a hard time saying ‘yes, this is it, this is over.’”
"There is a broader problem," iCapital Chief Investment Strategist Anastasia Amoroso says in response to the SVB crisis pic.twitter.com/01XRDLuOIy
— Bloomberg TV (@BloombergTV) March 17, 2023
Wall Street stocks set course for opening falls and Credit Suisse back under pressure
13:01 , Michael Hunter
Wall Street stocks looked set for opening declines on Friday, as the relief rally at the rescue of First Republic Bank gave way to wider worries about the problems faced by financial stocks.
In Europe, shares in Credit Suisse were back under pressure after their sharp recovery on news earlier in the week of a multi-billion pound support package from the Swiss central bank was also caught in the wider sense of worry.
Credit Suisse’s shares were down over 11% to SFr1.80.
New York’s S&P 500 was expected to fall 0.9% to 3957.75.
FTSE 100 surrenders gain for the day as worries over financial stocks keep the mood cautious
11:59 , Michael Hunter
London’s main stock index returned to the flatline on Friday, as the shockwaves from another banking rescue in the US stoked a cautious feel to trade and left investors unwilling to keep backing a modest rally.
Gains for resource stocks that led the move higher gave way to falls for fund managers an insurance stocks, some of the areas most exposed to the drop in the value of government bonds that has taken a toll on balance sheet of banks.
Overall, the FTSE 100 was down by around 3 points overall in mid-session exchanges at 7407.47, leaving it unchanged on the day. Fund managers Abrdn and M&G were among the biggest fallers.
James Hughes at Scope Markets said: “Sentiment right now does seem to be souring. That’s arguably no surprise following another US regional bank rescue last night.”
Ann Summers founder Jacqueline Gold dies age 62
11:54 , Simon Hunt
Ann Summers founder Jacqueline Gold has died at the age of 62.
The businesswoman died Thursday evening following a battle with breast cancer, with family members by her side.
Her sister Vanessa, who is CEO at lingerie and sex toy chain Ann Summers, said: “Jacqueline courageously battled stage 4 breast cancer for seven years and was an absolute warrior throughout her cancer journey.
“In life she was a trailblazer, a visionary, and the most incredible woman, all of which makes this news that much harder to bear.
Bodycote tops FTSE 250 as profits rise and it recovers all extra energy costs
10:44 , Michael Hunter
Shares in engineering firm Bodycote made the best gain on the FTSE 250 after it eased concern about the profitability of high energy users, reporting rising profits and covering rising costs in 2022.
The Cheshire company provides heat treatments that strengthen a range of industrial parts including turbine blades in jet engines. It said today that labour and general cost inflation were ‘fully recovered” and that it “completely recovered energy cost inflation” in the second half of the year. That was a turnaround after a “shortfall of £5 million” in the first half.
Its chief executive Stephen Harris called it “a key achievement” to use surcharges to cover the impact of spiking energy costs, with permanent prices rises in place for other forms of inflation.
“While there are near term macroeconomic uncertainties, we expect underlying volume to continue to grow ahead of the background markets, and margins are expected to expand as surcharges moderate,” he said.
For the whole of 2022, Bodycote’s revenue rose by over a fifth to almost £744 million, with headline operating profit for the year also up a fifth to over £112 million.
Its stock rose 29p to 610p, a rise of almost 5%.
Miners and oil stocks rally, BT down 3%
10:24 , Graeme Evans
Heavily-sold BP and Shell tempted investors today at the end of a week in which banking turmoil pushed oil prices to levels not seen in over a year.
The heavyweight pair rallied 4% amid hopes that support for Credit Suisse and US-based lender First Republic Bank has been enough to protect the economic outlook.
Shell added 81.5p to 2290.5p and BP lifted 18.75p to 501.2p but both stocks remain around 7% lower for the past week after Brent Crude prices earlier slipped below $75 a barrel for the first time since December 2021.
Mining companies also rose sharply today, with Anglo American and Rio Tinto both up 2% and Glencore 3% or 12.5p higher at 435.7p after the commodities trader benefited from Deutsche Bank’s reiterating a 575p target price.
The momentum for resources stocks helped the FTSE 100 index to improve 0.8% or 61.97 points to 7472, still some 3.5% short of where the top flight started the week. The FTSE 250 index improved 64.92 points to 18,823.50.
Other risers today included London Stock Exchange, which jumped 112p to 7438p after analysts at UBS hiked their price target to 8700p following recent annual results.
The bank is confident the markets infrastructure and data provider will be able to increase its revenue growth outlook to 6-8%, in line with US-based information services companies.
UBS added: “Given the improved messaging from the company following its 2022 results, we view LSEG's risk-reward profile to be very favourable at current valuations.”
Among other broker recommendations, GSK rose 23.6p to 1410.6p after analysts at Deutsche Bank switched to a “buy” recommendation and 1700p target.
The blue-chip fallers board was topped by BT Group, which dropped 3% or 4.9p to 141.75p after Ofcom delayed a decision on new pricing arrangements proposed by the company's Openreach arm.
The new terms for fibre-to-the-premises services had been due to come into force on 1 April, but Ofcom said it needs another couple of months after a number of “detailed and extensive responses” to its consultation.
Miners lead FTSE 100 higher, Bodycote up 7%
08:28 , Graeme Evans
Mining stocks are leading a stronger session for the FTSE 100 index, with London’s top flight up more than 1% or 88.80 points to 7498.83.
Shares in Glencore, Anglo American and Antofagasta are up more than 2%, while a stronger Brent crude price has lifted BP and Shell by 11.6p to 494.05p and 59.5p to 2268.5p respectively.
London Stock Exchange shares are 182p higher at 7508p after UBS lifted its price target to 8700p, with GSK up 24.8p to 1411.8 thanks to analysts at Deutsche Bank switching to a “buy” recommendation and 1700p target.
Banking stocks rallied at the end of a turbulent week as Barclays and HSBC both traded 2% higher. BT Group led the fallers board, dropping 1% or 1.75p to 144.9p after regulator Ofcom delayed a decision on full-fibre pricing.
The FTSE 250 index rose 0.5% or 102.20 points to 18,860.78, led by Bodycote after the heat treatment specialist’s annual results triggered a rise of 7% or 38p to 619.5p.
FTSE 100 seen higher as Asia markets rally
07:53 , Graeme Evans
The FTSE 100 index is poised to open higher, with IG Index futures expecting a rise of about or 0.7% or 54 points to 7462.
However, that level would still represent a fall of 3.7% in the week to date after banking sector turmoil sent investors running for cover.
Support for Credit Suisse and First Republic Bank has helped calm the mood over the past two sessions, with Japan’s Nikkei 225 up 1.2% and other markets in Asia trading higher this morning.
CMA warns UnitedHealth’s £1.2bn EMIS deal would be bad for NHS
07:51 , Simon Hunt
The competition watchdog has said the £1.2 billion merger between health tech companies UnitedHealth and EMIS would be bad for the NHS.
The Competition and Markets Authority said patient outcomes could be worse and increase costs for the taxpayer in relation to restricted access to patient data that the companies hold.
UnitedHealth and EMIS have 5 working days to offer legally binding proposals to the CMA to address the concerns identified.
Sorcha O’Carroll, Senior Mergers Director at the CMA, said: ”The NHS and the millions of patients under its care depend on critical behind-the-scenes technology to ensure people are looked after and receive the treatment needed to get better.
“This deal could see the NHS lose out on the benefits of competition, including innovation in these products and services and getting better value for money. UnitedHealth has the opportunity to address our concerns, otherwise it will progress to a more in-depth investigation.”
Brent crude steadies at end of turbulent week
07:42 , Graeme Evans
Brent crude futures are today moderately higher at just above $75 a barrel, having fallen sharply this week on fears that the banking crisis will lead to a sharper economic downturn.
The benchmark has declined by around 9% this week, leaving it at the lowest point since the end of 2021 and well down on levels above $100 a barrel for most of last summer.
Shares in BP and Shell, whose recent record results were driven by the surge in prices, have fallen by more than 11% over the past week.
First Republic support calms Wall Street
07:29 , Graeme Evans
Concerns over the position of First Republic Bank were allayed last night when a consortium of Wall Street banks stepped in with support worth $30 billion (£24.7 billion).
The private bank and wealth management company received uninsured deposits from lenders including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley.
Executive chairman Jim Herbert said: “Their collective support strengthens our liquidity position, reflects the ongoing quality of our business, and is a vote of confidence for First Republic and the entire US banking system.”
The move follows volatility for trading in First Republic’s shares, having lost more than 50% of their value in the past week. They finished 10% higher last night as Wall Street shares staged a relief rally, with the S&P 500 index up 1.7%.
First Republic said it was now focused on reducing its borrowings and evaluating the composition and size of its balance sheet. It has also suspended its dividend.