London close: Stocks finish higher as banks rebound

London stocks rebounded on Tuesday, following a tumultuous start to the week as concerns over the fallout from the collapse of Silicon Valley Bank gripped the markets.

The FTSE 100 closed 1.17% higher at 7,637.11, while the FTSE 250 climbed 1.62% to 19,129.66.

London’s positive finish came as Wall Street also saw early gains, with the tech-heavy Nasdaq Composite leading the way across the pond.

However, the pound struggled against major currencies, falling 0.24% on the dollar to trade at $1.2154, and dropping 0.11% against the euro to change hands at €1.1341.

“Market sentiment appears to have a turn for the better today, with equities throughout Europe and the US moving higher despite ongoing concerns over the health of the banking sector,” said IG senior market analyst Joshua Mahony.

“The demise of the Silicon Valley Bank brought concerns of further contagion throughout regional banks, leading to widespread calls over who could be the next to fall.”

However, Mahony said that while there were likely to be others which would have to write down bond market investments, parallels to the global financial crisis looked limited.

“With US banking stocks seeing widespread gains, there is a distinct feeling of confidence that we will not see widespread issues arise throughout the financial sector.”

UK unemployment steady, US inflation comes in cooler

In economic news, new data from the Office for National Statistics (ONS) revealed that the UK unemployment rate remained steady at 3.7% in the three months to January, while wage growth slowed for the first time in more than a year.

The figures showed that average earnings growth, excluding bonuses, fell from 6.7% to 6.5% year-on-year.

Despite the stable unemployment rate, the economic inactivity rate decreased by 0.2 percentage points to 21.3%, driven by 16-to-24 year-olds entering the workforce.

The number of working days lost to strikes also decreased in January to 220,000 from 822,000 in December.

“The number of working days lost to strikes fell in January from the very high level seen in December,” noted Darren Morgan, director of economic statistics at the ONS.

“Nevertheless, many days were still lost, with education the most affected sector.”

Meanwhile, growth in the cost of living in the United States eased last month, as the consumer price index (CPI) rose by 0.4% on a monthly basis, in line with economists' predictions.

However, the annual rate of increase in CPI declined to 6.0% in February from 6.4% in January, below economists' forecasts for around 6.1%.

Food prices rose by 0.4%, while energy prices declined by 0.6%, despite a 1.0% increase in petrol prices.

Core CPI, which excludes food and energy, increased by 0.5% compared to the previous month, slightly above economists' consensus of 0.4%.

The year-on-year rate of change for core CPI decreased by 0.1 percentage points to 6.5%.

Additionally, shelter prices increased by 0.8% on the month, which was expected to lead to a moderation in the first half of 2023.

“At face value, the ongoing strength of inflation presents a dilemma for the Fed as it focuses on maintaining financial stability,” said Andrew Hunter, deputy chief US economist at Capital Economics.

“But even if the current crisis ends up being resolved relatively quickly, we suspect the resulting tightening in credit conditions will still do lasting damage to the economy.”

Banks recover from Monday’s sell-off, Genuit tumbles

On London’s equity markets, interdealer broker TP ICAP saw its shares fall by 4.71% despite reporting a jump in full-year profit, boosted by increased market volatility.

Merchant bank Close Brothers also suffered heavy losses, with its shares falling by 5.56% after it reported a drop in profits due to provisions related to the Novitas loan book.

Piping manufacturer Genuit Group also saw a sharp drop in its share price, with shares falling by 6.26% after reporting that full-year profits had slumped despite a modest uptick in revenues.

Operating profits fell by 20.4% to £53.4m, and pre-tax profits tumbled 27.8% to £45.4m, even as revenues rose 4.7% to £622.2m.

On the upside, engine maker Rolls-Royce Holdings rallied by 7.03% as Citi lifted its price target on the shares and pointed to "a clear route to much better cash flow."

Meanwhile, Standard Chartered and HSBC reversed earlier losses to see gains of 1.16% and 1.57% respectively, after continuing their sell-off from Monday earlier in the session.

Barclays was also on the front foot, seeing gains of 3.11% after suffering heavy losses on Monday, while British Gas owner Centrica gained 3.42% after announcing plans to extend the lives of two UK nuclear power stations.

Molten Ventures jumped by 8.7% after saying it expects no impact from the collapse of SVB, after the lender's UK arm was rescued by HSBC.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,637.11 1.17%
FTSE 250 (MCX) 19,129.66 1.62%
techMARK (TASX) 4,547.87 1.13%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 154.74p 6.72%
Ocado Group (OCDO) 441.20p 4.11%
Hargreaves Lansdown (HL.) 808.60p 3.99%
St James's Place (STJ) 1,198.00p 3.63%
Centrica (CNA) 107.50p 3.42%
BAE Systems (BA.) 938.00p 3.30%
Weir Group (WEIR) 1,860.00p 3.19%
Spirax-Sarco Engineering (SPX) 11,225.00p 3.17%
Barclays (BARC) 152.06p 3.11%
Flutter Entertainment (CDI) (FLTR) 14,140.00p 3.02%

FTSE 100 - Fallers

Fresnillo (FRES) 736.60p -1.45%
National Grid (NG.) 1,059.00p -0.47%
Imperial Brands (IMB) 1,911.50p -0.47%
British American Tobacco (BATS) 3,000.00p -0.45%
Severn Trent (SVT) 2,812.00p -0.42%
Johnson Matthey (JMAT) 2,035.00p -0.10%
Beazley (BEZ) 544.50p -0.09%
Hiscox Limited (DI) (HSX) 1,112.50p -0.09%
Tesco (TSCO) 254.80p -0.08%
Pearson (PSON) 842.20p 0.02%

FTSE 250 - Risers

Molten Ventures (GROW) 330.00p 8.70%
Wizz Air Holdings (WIZZ) 2,896.00p 7.74%
Aston Martin Lagonda Global Holdings (AML) 262.30p 6.97%
National Express Group (NEX) 134.60p 6.07%
Bank of Georgia Group (BGEO) 2,580.00p 5.95%
HGCapital Trust (HGT) 347.00p 5.15%
Trainline (TRN) 251.70p 5.14%
Mitchells & Butlers (MAB) 165.10p 4.96%
W.A.G Payment Solutions (WPS) 83.30p 4.91%
4Imprint Group (FOUR) 4,495.00p 4.78%

FTSE 250 - Fallers

Genuit Group (GEN) 262.00p -6.26%
Close Brothers Group (CBG) 955.50p -5.95%
TP Icap Group (TCAP) 170.20p -4.60%
Digital 9 Infrastructure NPV (DGI9) 76.60p -2.30%
Hunting (HTG) 250.00p -1.96%
Man Group (EMG) 263.70p -1.90%
Elementis (ELM) 116.70p -1.60%
Computacenter (CCC) 2,084.00p -1.42%
Spirent Communications (SPT) 173.60p -1.31%
JPMorgan Japanese Inv Trust (JFJ) 458.00p -1.08%