London midday: FTSE extends gains as banking shares recover

London stocks had extended gains by midday on Tuesday as a sense of calm returned to markets following recent turmoil in the banking sector, with all eyes on upcoming rate decisions from the Federal Reserve, Bank of England and Swiss National Bank.

The FTSE 100 was up 1.5% at 7,511.85.

Russ Mould, investment director at AJ Bell, said: "The clouds are parting and glimpses of blue sky are giving hope to investors after a chaotic few weeks. With no new troubles in the banking sector for the past 24 hours, markets are hoping that’s a sign the crisis could have peaked.

"The key question is whether this is the calm before the storm. The Federal Reserve’s next interest rate decision tomorrow still has the potential to kick up a fuss if the market thinks it is being too aggressive with rate rises. Investors’ nerves are already frail, and it wouldn’t take much to disturb the peace on the markets seen today."

On home shores, figures released earlier by the Office for National Statistics showed that government borrowing hit a record high for February due to the energy support scheme.

Public sector net borrowing came in at £16.7bn, up from £7.1bn in February 2022 and above consensus expectations of £11.4bn. It marked the highest level for the month of February since records began in 1993.

However, the data also showed that debt interest payments fell by £1.3bn on the year to £6.9bn.

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The news on the public finances may have raised the Chancellor’s hopes that he will be able to announce a pre-election giveaway later this year.

"But the big risk is that a further escalation in the banking crisis causes a deterioration in the fiscal outlook as the hit to the public finances from weaker economic growth is only partially cushioned by lower gilt yields."

In equity markets, banks were among the top performers, recovering some poise after recent turmoil sent shares tumbling. NatWest, Barclays, Lloyds and Standard Chartered were all up.

Elsewhere, TI Fluid Systems rallied after an upgrade to ‘hold’ from ‘underperform’ at Jefferies, mainly on valuation grounds, with the share price down around 20% since January.

B&Q and Screwfix owner Kingfisher reversed earlier gains to trade down, as it posted a drop in full-year profit - in line with its guidance - with trade normalising after the pandemic boost. In the year to the end of January 2023, adjusted pre-tax profit fell 20.2% to £758m, with sales down 0.9% to £13.1bn. The company had guided to pre-tax profit of £730m to £760m.

Educational publisher Pearson ticked lower after saying it was selling its Online Learning Services (POLS) operation to private equity firm Regent for a deferred sum as part of a strategic review of its business.

Market Movers

FTSE 100 (UKX) 7,511.85 1.46%
FTSE 250 (MCX) 18,790.55 1.60%
techMARK (TASX) 4,504.20 0.94%

FTSE 100 - Risers

NATWEST GROUP (NWG) 272.90p 5.86%
Rolls-Royce Holdings (RR.) 148.64p 5.43%
Barclays (BARC) 142.48p 4.49%
Lloyds Banking Group (LLOY) 48.02p 4.15%
Standard Chartered (STAN) 640.40p 4.13%
Prudential (PRU) 1,054.00p 4.10%
Ashtead Group (AHT) 5,064.00p 4.07%
Sainsbury (J) (SBRY) 261.40p 3.81%
M&G (MNG) 187.05p 3.80%
JD Sports Fashion (JD.) 170.35p 3.65%

FTSE 100 - Fallers

Fresnillo (FRES) 726.20p -2.39%
Endeavour Mining (EDV) 1,798.00p -1.80%
Kingfisher (KGF) 270.60p -0.99%
Vodafone Group (VOD) 91.97p -0.54%
Severn Trent (SVT) 2,834.00p -0.53%
Convatec Group (CTEC) 228.00p -0.44%
United Utilities Group (UU.) 1,052.00p -0.43%
Croda International (CRDA) 6,404.00p -0.37%
Coca-Cola HBC AG (CDI) (CCH) 2,138.00p -0.37%
Pershing Square Holdings Ltd NPV (PSH) 2,765.00p -0.36%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 207.00p 6.05%
Bank of Georgia Group (BGEO) 2,575.00p 5.53%
4Imprint Group (FOUR) 4,940.00p 5.44%
ASOS (ASC) 760.50p 5.33%
Intermediate Capital Group (ICP) 1,222.50p 4.80%
Close Brothers Group (CBG) 943.50p 4.66%
Man Group (EMG) 236.10p 4.65%
Wizz Air Holdings (WIZZ) 2,817.00p 4.53%
Just Group (JUST) 83.85p 4.29%
OSB Group (OSB) 513.00p 4.27%

FTSE 250 - Fallers

Baltic Classifieds Group (BCG) 150.20p -3.47%
Essentra (ESNT) 179.00p -1.97%
Centamin (DI) (CEY) 103.65p -1.43%
Bodycote (BOY) 620.50p -1.35%
Target Healthcare Reit Ltd (THRL) 69.30p -1.00%
Balanced Commercial Property Trust Limited (BCPT) 82.80p -0.84%
Marshalls (MSLH) 310.60p -0.83%
UK Commercial Property Reit Limited (UKCM) 51.50p -0.77%
Bakkavor Group (BAKK) 106.20p -0.75%
Pacific Horizon Inv Trust (PHI) 578.00p -0.69%