London close: Stocks manage gains after Credit Suisse takeover

London stocks managed a positive finish on Monday, having clawed back from a downbeat start as investors mulled the implications of Credit Suisse’s takeover by UBS.

The FTSE 100 ended the session up 0.93% at 7,403.85, and the FTSE 250 was ahead 0.13% at 18,495.13.

Sterling was also in the green, last rising 0.8% on the dollar to $1.2270, and advancing 0.26% against the euro to trade at €1.1447.

“What began as a very ‘sea of red’ kind of day has turned into a rebound, with stocks clawing back losses,” said IG chief market analyst Chris Beauchamp.

“Ultimately, while it is a shock to see a global bank disappear so quickly, it is reassuring to see governments and regulators moving quickly to seal off any source of further contagion.

“And after the ECB last week, investors seem relaxed about the prospect of a 25-basis point hike from the Fed this week, though they will hope for some fairly dovish commentary to go with it.”

Beauchamp said the big miners were dominating the London leaderboard, as the dollar dropped back on expectations of a more dovish Fed.

“This is still the big unknown, but there is good reason to think that the Fed will look to rein in its hawks following last week’s turmoil.

“Should the hawks win out, then we can expect more fireworks.”

On the economic front, UK property asking prices rose by 0.8% in March from the prior month and showed signs of stabilising after last year's ‘mini-budget’ that created severe market volatility, according to a survey released earlier.

Online real estate agent Rightmove said the market still faced challenges from higher interest rates and economic headwinds.

Optimism about a recovery was tempered by the fact that March’s growth was below the 1% average monthly increase for the month over the last 20 years with sellers more cautious than usual about pricing.

Rightmove director Tim Bannister said the pace of the market reached an “unsustainable level in the last two years, and was on track to slow to a more normal level, though the speed of this slowdown to more normality was accelerated by the reaction to September’s mini-budget”.

Borrowing costs were still nearly double their level before former prime minister Liz Truss's plan for £44bn in unfunded tax cuts which led to chaos on bond markets, forcing the Bank of England to intervene.

Rightmove said sales agreed in the first-time buyer segment were improving faster than larger homes which were in demand during the Covid-19 pandemic frenzy for more space.

“While higher mortgage rates and economic headwinds raise challenges, many potential home movers who were effectively side-lined in the frenetic bidding wars of the last two years will find that a slower-paced market gives them time to plan and secure their next move as we enter the traditionally busy spring-buying season,” Bannister said.

Elsewhere, it emerged that British workers were £11,000 worse off a year after 15 years of “unprecedented” wage stagnation and economic policy failure, according to the Resolution Foundation.

The foundation’s study compared wage inflation before the banking industry sparked the 2008 financial crash and subsequent trends to find the average worker was falling well behind inflation and other comparable economies such as Germany.

It said the gap had widened to £4,000 a year now from more than £500 a year in 2008.

Had wages continued to grow as they were before the financial crash of 2008, the average worker would make £11,000 more per year than they do now, taking rising prices into account, the foundation added.

“Nobody who’s alive and working in the British economy today has ever seen anything like this,” the foundation’s chief executive Torsten Bell told the BBC.

“This is definitely not what normal looks like. This is what failure looks like.”

The broadcaster, which is reporting the findings through its Panorama current affairs programme, quoted Bell as calling the economic situation “almost completely unprecedented”.

On the continent, the single currency bloc's shortfall on trade in goods with the rest of the world narrowed at the start of the year, but only because imports fell more quickly than exports.

According to Eurostat, in seasonally-adjusted terms the Eurozone's trade deficit on goods fell from -€13.4bn for December to -€11.4 in January.

Exports declined at a month-on-month clip of 1.1% to reach €241.5bn, for a second month in a row, alongside a 1.8% drop in imports to €252.9bn, with the latter constituting a fifth consecutive fall.

The German economy was meanwhile expected to contract in the first quarter, according to the Bundesbank.

German GDP shrank 0.4% in the fourth quarter of last year and another contraction in the first quarter will mean the country has gone into a technical recession.

In its latest monthly report, the central bank said: "German economic activity will probably fall again in the current quarter."

However, it added the drop was likely to be less pronounced than in the final quarter of 2022.

Finally on the economic front, the People's Bank of China announced on Monday that it will maintain current loan prime rates (LPR) for both one- and five-year loans, following a 0.25 percentage point cut in the reserve requirement ratio (RRR) for nearly all banks last week.

It confirmed the one-year LPR would remain at 3.65%, and the five-year at 4.3%, with both rates consistent since August last year.

PBoC governor Yi Gang had described the current real rates as "relatively appropriate" during a meeting just before the National People's Congress.

Additionally, the Bank had previously maintained the one-year medium-term lending facility (MLF) rate at 2.75% for March.

On London’s equity markets, banks were again the biggest fallers, with Standard Chartered down 3%, Barclays off 2.29%, and HSBC Holdings slipping 0.07%, although losses were less pronounced than earlier.

Essentra tumbled 14.67% as it traded without entitlement to the dividend.

FirstGroup slipped 0.1% after it said the government had extended its current contract for the troubled Avanti West Coast rail service to 15 October.

On the upside, precious metals miners were the standout gainers as gold prices rose, with Endeavour Mining up 4.03%, Fresnillo rising 4.79%, and Centamin ahead 4.47%.

Miner Glencore was boosted 3.86% by an upgrade to ‘buy’ from ‘neutral’ at UBS.

Intertek managed gains of 0.53% after announcing the appointment of Colm Deasy as group chief financial officer and as an executive board director.

It also said it was establishing a new group executive committee, effective immediately.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,403.85 0.93%
FTSE 250 (MCX) 18,495.13 0.13%
techMARK (TASX) 4,462.04 0.10%

FTSE 100 - Risers

Anglo American (AAL) 2,626.00p 4.87%
Fresnillo (FRES) 744.00p 4.79%
Antofagasta (ANTO) 1,503.00p 4.09%
Endeavour Mining (EDV) 1,831.00p 4.03%
Glencore (GLEN) 449.35p 3.86%
International Consolidated Airlines Group SA (CDI) (IAG) 137.66p 3.30%
BAE Systems (BA.) 932.40p 2.96%
Frasers Group (FRAS) 740.50p 2.63%
Mondi (MNDI) 1,299.00p 2.61%
3i Group (III) 1,520.00p 2.53%

FTSE 100 - Fallers

Standard Chartered (STAN) 615.00p -3.00%
Barclays (BARC) 136.36p -2.29%
Centrica (CNA) 99.80p -1.38%
Scottish Mortgage Inv Trust (SMT) 662.20p -1.34%
Smith & Nephew (SN.) 1,161.50p -0.68%
Rentokil Initial (RTO) 545.00p -0.33%
Lloyds Banking Group (LLOY) 46.11p -0.31%
DCC (CDI) (DCC) 4,279.00p -0.26%
Sage Group (SGE) 732.20p -0.19%
Johnson Matthey (JMAT) 1,949.50p -0.13%

FTSE 250 - Risers

Centamin (DI) (CEY) 105.15p 4.47%
Balfour Beatty (BBY) 346.80p 4.08%
Network International Holdings (NETW) 259.00p 2.94%
International Distributions Services (IDS) 228.20p 2.79%
W.A.G Payment Solutions (WPS) 89.40p 2.76%
IG Group Holdings (IGG) 692.00p 2.75%
Future (FUTR) 1,110.00p 2.68%
Kainos Group (KNOS) 1,324.00p 2.64%
Bodycote (BOY) 629.00p 2.19%
Hammerson (HMSO) 23.69p 2.16%

FTSE 250 - Fallers

Essentra (ESNT) 182.60p -14.67%
Syncona Limited NPV (SYNC) 137.40p -4.98%
Digital 9 Infrastructure NPV (DGI9) 71.60p -4.81%
ICG Enterprise Trust (ICGT) 980.00p -4.67%
Tullow Oil (TLW) 27.60p -4.63%
Synthomer (SYNT) 124.80p -4.15%
Coats Group (COA) 74.90p -3.97%
Ithaca Energy (ITH) 146.70p -3.80%
Apax Global Alpha Limited (APAX) 154.00p -3.63%
Renishaw (RSW) 3,996.00p -2.92%