London close: Renewed banking woes see stocks finish lower

London's markets closed in negative territory on Friday, with banks taking the brunt of the hit as sentiment once again soured.

Concerns about the European banking sector were reignited when Frankfurt's Deutsche Bank saw its shares slide, after the cost of insuring against its default spiked.

The FTSE 100 closed down 1.26% at 7,405.45, while the FTSE 250 was 1.26% weaker at 18,493.83.

In currency markets, sterling was down 0.56% on the dollar to last trade at $1.2218, while it strengthened 0.15% against the euro to change hands at €1.1359.

“It looks like the banking crisis isn’t solved,” said IG chief market analyst Chris Beauchamp.

“Stocks are down heavily today, especially in Europe, as everyone’s struggler-of-choice Deutsche Bank sees its stock fall sharply.

“This renewed bout of selling shows that the takeover of Credit Suisse hasn’t put a lid on the crisis, and investors will go into the weekend hoping for some more calming words from authorities.”

Services underpin private sector output as retail sales rise

In economic news, UK private sector output in March showed continued growth, boosted by the service industry.

The S&P Global/CIPS UK composite output index fell to 52.2 from February's eight-month high of 53.1, but was still above the no-change level of 50.0.

The services PMI business activity index also fell to 52.8, while the manufacturing output index dropped to 49.0.

Despite the growth, staff shortages held back progress, the compiler said, although the overall rate of inflation decreased, marking its lowest level since March 2021.

“The UK economy looks to have returned to growth in the first quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

“The surveys are broadly consistent with GDP growing at only a modest quarterly rate of 0.2%, but this represents a welcome expansion compared to the lack of growth in the second half of last year.”

Elsewhere, retail sales jumped by 1.2% in February, exceeding analyst expectations according to the Office for National Statistics.

It followed January's growth of 0.9%, returning sales volumes to pre-pandemic levels.

A rise in non-food sales drove the increase, particularly in department stores, which saw a 5.5% increase, and clothing shops, which experienced a 2.9% jump.

“Looking at the latest retail sales figures, you might be forgiven for wondering if Britain really is in the middle of a cost-of-living crisis,” said Danni Hewson, head of financial analysis at AJ Bell.

“But consumers appear to be choosing supermarkets over takeaways, and are snapping up bargains wherever they can.”

Hewson said that while sales were back to pre-Covid levels, it in fact showed an economy that was stagnant.

“Compare how much people are paying for the privilege of buying the same amount of stuff they did three years ago, and that’s up a staggering 16.6%.”

On the continent, economic growth in the eurozone continued to increase in March.

The flash eurozone composite purchasing managers' index, which measures activity in the manufacturing and services sectors, rose to 54.1 - its highest level in 10 months.

Meanwhile, the US saw resurgent economic activity in March as well, with the S&P Global composite output index rising to 53.3 - its fastest level in almost a year.

However, separate data showed durable goods orders dropping 1% stateside in February, mainly due to a fall in transportation equipment.

Banks lead the slide again as concerns intensify

On London’s equity markets, the banking sector saw serious declines as Barclays, NatWest Group, Standard Chartered, and HSBC Holdings fell a respective 4.21%, 3.58%, 6.42% and 2.59%.

“As I said many times in the last fortnight, it only stops once people stop asking who’s next,” quipped Neil Wilson, chief market analyst at Markets.com.

“And it doesn’t seem like we’re at that stage yet."

Elsewhere, travel firm TUI saw declines of 2.37% after announcing a €1.8bn fundraising to reduce debt and interest costs.

Oil stocks also took a hit due to weaker crude prices, with Harbour Energy down 6.2% and Tullow Oil 4.79% lower.

Harbour also announced earlier that it has submitted development plans for the Zama field to the Mexican authorities.

On the upside, consumer goods giants Reckitt Benckiser Group and Unilever rose 2.01% and 0.59%, respectively, while drinks company Diageo added 1.01% and cigarette giant British American Tobacco advanced 1/72% as defensive names rallied.

Pub chain JD Wetherspoon was a standout gainer, rising 13.6% by the close.

The company reported a half-year profit of £4.6m, compared to a loss of £26.1m in the same period last year.

Despite "ferocious" inflationary pressures, Wetherspoons said it managed to achieve a sales increase of 14.9% over the last seven weeks.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,405.45 -1.26%
FTSE 250 (MCX) 18,493.83 -1.26%
techMARK (TASX) 4,505.12 -0.89%

FTSE 100 - Risers

Reckitt Benckiser Group (RKT) 6,086.00p 2.01%
British American Tobacco (BATS) 2,872.00p 1.72%
Beazley (BEZ) 564.50p 1.35%
Diageo (DGE) 3,599.00p 1.01%
Endeavour Mining (EDV) 1,860.00p 0.92%
Unilever (ULVR) 4,197.00p 0.59%
Coca-Cola HBC AG (CDI) (CCH) 2,182.00p 0.51%
Imperial Brands (IMB) 1,883.50p 0.43%
Rentokil Initial (RTO) 566.40p 0.43%
National Grid (NG.) 1,058.50p 0.24%

FTSE 100 - Fallers

Standard Chartered (STAN) 592.00p -6.42%
Ashtead Group (AHT) 4,737.00p -5.26%
Barclays (BARC) 133.90p -4.21%
JD Sports Fashion (JD.) 164.15p -4.15%
CRH (CDI) (CRH) 3,888.00p -3.95%
Prudential (PRU) 1,024.00p -3.94%
NATWEST GROUP (NWG) 258.50p -3.58%
Shell (SHEL) 2,200.50p -3.15%
Weir Group (WEIR) 1,743.50p -3.14%
Scottish Mortgage Inv Trust (SMT) 649.60p -3.04%

FTSE 250 - Risers

Wetherspoon (J.D.) (JDW) 660.00p 13.60%
Telecom Plus (TEP) 1,926.00p 2.21%
Crest Nicholson Holdings (CRST) 210.40p 1.74%
W.A.G Payment Solutions (WPS) 91.40p 1.56%
Cranswick (CWK) 3,014.00p 1.48%
Kainos Group (KNOS) 1,371.00p 1.26%
Britvic (BVIC) 877.50p 1.21%
Chemring Group (CHG) 276.00p 1.10%
Games Workshop Group (GAW) 9,115.00p 1.05%
Baltic Classifieds Group (BCG) 155.00p 1.04%

FTSE 250 - Fallers

Harbour Energy (HBR) 245.20p -6.20%
Tullow Oil (TLW) 28.22p -4.79%
Shaftesbury Capital (SHC) 107.70p -4.69%
Hammerson (HMSO) 21.66p -4.50%
Ithaca Energy (ITH) 146.40p -4.44%
Great Portland Estates (GPE) 468.40p -4.29%
IWG (IWG) 144.40p -4.24%
Vistry Group (VTY) 722.50p -4.11%
Aston Martin Lagonda Global Holdings (AML) 212.80p -4.10%
Intermediate Capital Group (ICP) 1,166.00p -4.07%