London midday: Stocks maintain gains as banks recover

Mon 27 Mar 2023

LONDON (SHARECAST) - (Sharecast News) - London stocks were still in the black by midday on Monday as worries about the banking sector subsided.
The FTSE 100 was up 0.9% at 7,473.00.

The mood was listed after First Citizens Bank agreed to buy the deposits and loans of collapsed Silicon Valley Bank from US regulator the Federal Deposit Insurance Corporation (FDIC).

As of 10 March, Silicon Valley Bridge Bank, National Association, had around $167bn in total assets and $119bn in total deposits.

The FDIC, which took over SVB earlier this month, said in a statement that the transaction includes the purchase of around $72bn of Silicon Valley Bridge Bank's assets at a discount of $16.5bn.

The FDIC created Silicon Valley Bridge Bank earlier this month following the closure of SVB by the California Department of Financial Protection and Innovation.

Approximately $90bn in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC said it received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500m.

First Citizens will open the 17 former branches of Silicon Valley Bridge Bank as First Citizens banks on Monday.

The UK arm of SVB was purchased by HSBC two weeks ago for 1.

Russ Mould, investment director at AJ Bell, said news of the First Citizens deal was "helping to repair sentiment towards the sector".

"Together with HSBC's purchase of SVB's UK operations and UBS' takeover of Credit Suisse, investors will be hoping for some stability from now on in the broader sector.

"That naturally turns the attention back to central banks where there are lingering concerns that some like the Federal Reserve might have made policy mistakes, going too fast and hard with interest rate rises. It means that worries are merely shifting to something else on the menu, rather than having a clean slate with which to drive a new global market rally."

He added: "Many investors still don't want to touch the banking sector for fears there is more distress to come. Yet for every bleak situation there is always someone who sees an opportunity to make money, hence why we're seeing a rise in the share price of many European banks today."

On home shores, investors were mulling the latest survey from the Confederation of British Industry, which showed that retailers are expecting an increase in sales for the first time since last September.

The CBI's expected sales balance rose to +9 for April from -18 in March. Meanwhile, the reported sales balance for March came in at +1, down from +2 in February.

CBI principal economist Martin Sartorius said: "It's encouraging that activity in the retail sector showed signs of stabilising after a challenging winter. This resilience has helped inspire some spring shoots of optimism, with firms expecting an increase in sales for the first time since last September."

In equity markets, banks were off earlier highs but still firmer, having tumbled on Friday after a spike in Deutsche Bank credit default swaps reignited sector fears. Barclays, HSBC and Lloyds all gained.

On the downside, heavily-weighted mining stocks fell after data showed that China's industrial profits slumped 22.9% in the first two months of the year as the effects of Covid curbs continued to take their toll. Rio Tinto, Anglo American and Antofagasta were all down.

Royal Mail owner International Distribution Services was the biggest loser on the FTSE 250 after JPMorgan slashed its price target on the shares to 250p from 285p.

Market Movers

FTSE 100 (UKX) 7,473.00 0.91%
FTSE 250 (MCX) 18,585.35 0.49%
techMARK (TASX) 4,538.85 0.75%

FTSE 100 - Risers

3i Group (III) 1,591.00p 3.14%
Barclays (BARC) 137.20p 2.46%
Ocado Group (OCDO) 448.00p 2.00%
Admiral Group (ADM) 2,035.00p 1.95%
Persimmon (PSN) 1,223.00p 1.92%
Burberry Group (BRBY) 2,386.00p 1.84%
Ashtead Group (AHT) 4,820.00p 1.75%
Airtel Africa (AAF) 106.40p 1.72%
Associated British Foods (ABF) 1,951.00p 1.72%
Weir Group (WEIR) 1,771.00p 1.58%

FTSE 100 - Fallers

Fresnillo (FRES) 723.80p -1.20%
Endeavour Mining (EDV) 1,838.00p -1.18%
Anglo American (AAL) 2,517.00p -0.83%
Rio Tinto (RIO) 5,211.00p -0.80%
Antofagasta (ANTO) 1,508.00p -0.59%
BT Group (BT.A) 139.00p -0.54%
Phoenix Group Holdings (PHNX) 546.00p -0.51%
Severn Trent (SVT) 2,807.00p -0.32%
Standard Chartered (STAN) 590.60p -0.20%
Coca-Cola HBC AG (CDI) (CCH) 2,179.00p -0.14%

FTSE 250 - Risers

Harbour Energy (HBR) 253.70p 3.47%
Aston Martin Lagonda Global Holdings (AML) 219.40p 3.10%
Wetherspoon (J.D.) (JDW) 680.00p 3.03%
IWG (IWG) 148.70p 2.98%
Bank of Georgia Group (BGEO) 2,605.00p 2.96%
HGCapital Trust (HGT) 334.50p 2.61%
Genus (GNS) 3,000.00p 2.60%
Pagegroup (PAGE) 454.20p 2.53%
W.A.G Payment Solutions (WPS) 93.70p 2.52%
Carnival (CCL) 668.60p 2.45%

FTSE 250 - Fallers

International Distributions Services (IDS) 220.60p -4.25%
Centamin (DI) (CEY) 101.15p -2.22%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 426.00p -2.07%
Pacific Horizon Inv Trust (PHI) 572.00p -1.89%
Bakkavor Group (BAKK) 106.40p -1.85%
Inchcape (INCH) 717.00p -1.78%
JPMorgan Japanese Inv Trust (JFJ) 460.00p -1.50%
Fidelity China Special Situations (FCSS) 244.00p -1.41%
Clarkson (CKN) 3,135.00p -1.26%
Jlen Environmental Assets Group Limited NPV (JLEN) 117.00p -1.18%
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