Sector Movers: Banking stocks struggle, weaker dollar gives miners respite

Banking stocks struggled for much of Wednesday, while firmer oil prices and a weaker dollar gave resource stocks some respite from recent declines.

The FTSE 100 ended 1.43% or 84.87 points lower at 5,837.14, while the FTSE 250 fell 1.89% or 307.26 points to 15,992.42. Oil futures returned to positive territory and base metals went through another session marked by modest gains. Earlier, the Energy Information Administration, statistical arm of the US Department of Energy, said the country’s crude oil inventories rose by 7.8m barrels in the last week, well above analysts' expectations for a rise of 4.8m barrels, as imports rose.

However, the data failed to halt an oil price recovery that began during the Asian session, as the US dollar weakened following lacklustre data and Russia reiterated its willingness to take part in talks with OPEC to cut production.

Russian Foreign Minister Sergei Lavrov said if there is consensus among the OPEC members and non-OPEC producers to meet, "then we will meet". At 1634 GMT, the Brent front-month futures contract was up 4.74% or $1.55 to $34.27 per barrel, while WTI was 5.09% or $1.52 higher at $31.40 per barrel.

Base metal futures posted marginal gains across the London Metal Exchange board. At 1635 GMT, the much scrutinised three-month copper delivery futures contract was up 1.6% to $4,614.00 per metric tonne.

Concurrently, primary aluminium (up 1.2%), zinc (up 1.7%), lead (up 1.3%), nickel (up 0.9%) and tin (up 0.8%) contracts also headed higher.

Unsurprisingly, biggest gainers on the FTSE 100 included Anglo American (up 8.55%), Rio Tinto (up 4.17%), Glencore (up 3.37%), Antofagasta (up 2.76%) and BHP Billiton (up 1.71%), while Tullow Oil (up 1.77%) stacked up decent gains on the FTSE 250 along with a number of other oil and gas companies.

However, banking stocks dragged both headline indices lower. Standard Chartered (down 4.28%) plunged after Citi lowered its target price on the shares of Asia-focused and commodity-exposed lender. The broker described the lender’s valuation at 0.5 times estimated 2016 price-to-tangible book value as "low" in the context of global banks.

Royal Bank of Scotland, Barclays and HSBC fell as UBS warned that another year of fundamental headwinds such as lower oil prices and central bank policy will likely weigh on earnings expectations for global banks in 2016.

Vodafone (down 3.90%) fell a day after the telco confirmed that it is in discussions with Liberty Global about the possible creation of a joint venture in the Netherlands that would incorporate both companies’ local operating businesses.

Finally, pharmaceutical giant GlaxoSmithKline jumped after the company posted full year results showing revenues increasing 6% and core earnings per share down 15%, slightly ahead of guidance, and reiterated its confidence that earnings growth would return in 2016 at double-digit levels.