Sector movers: Banks and homebuilders lead gains

For the first quarter of the year, Asia and commodities-focused StanChart reported a 59% drop in pre-tax profits to $589m (£405m) as revenues came off by 23%.

However, revenues were slightly higher than over the previous three months and losses from bad loans in fact fell 1% to $471m, a much better outcome than analysts had feared.

That sent shares in London-based StanChart higher by 9.76% to £571.40p, capping a nearly 50% gain in the stock since the early-February lows - which at one point saw the stock trade at approximately half their book value - mirroring a rise in the prices of some industrial commodities, such as iron ore.

Nonetheless, market chatter after the results was generally cautious regarding the outlook, not least due to the challenges facing the Chinese economy.

Read-across from StanChart sent shares Lloyds were up 3.57% to 70p, while stock in HSBC Holdings gained 2.14% to 469.4p, Barclays tacked on 2.11% to 173.95p and RBS another 1.65% to 252.4p.

The main UK lenders may also have received a boost from positive comments from Credit Suisse on European banks, who strategist Andrew Garthwaite said would be a key beneficiary of steepening yield curves.

Garthwaite also told clients to underweight so-called 'bond proxies', including Tesco, National Grid, Pennon, Severn Trent, British Land, Intu Properties and Derwent London.

That helped the likes of RBS brush off a note from Deutsche Bank in which the broker´s analysts trimmed their target price from 248p to 241p ahead of the release of its first quarter numbers on 29 April.

Homebuilders headed higher as the gloom surrounding the 23 June referendum on Britain´s membership of the European Union appeared to lift a little.

Improved sentiment was particularly evident in foreign exchange markets, where the pound jumped 0.69% to 1.4582 as of 18:32 BST, despite the results from two new polls published on Tuesday showing that the 'Leave' camp had in fact gained a little bit of ground.

An ORB/Telegraph poll published on Tuesday put the 'Remain' camp ahead at 51.0% versus 43.0% of voters who said they would throw their hat in the ring for the 'Leave' option. Nonetheless, that meant 'Remain' had lost two percentage points of support which were picked up by 'Leave'.

However, in the last week Bloomberg´s Brexit Tracker put the odds of voters opting to leave the EU at about 20%.

The Daily Telegraph cautioned that "[this] vast gap in expectation means that the Remain campaign is still largely at risk of voter complacency. Many of their supporters will expect to win the referendum and thus fail to recognise the significance of their own vote."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, was more upbeat. In a research report sent to clients he said a "last-minute swelling" of support for no-change should mean the 'Remain' camp would prevail on 23 June.

Nonetheless, he cautioned there was a near-term risk the recent rally in sterling against the US dollar and the pound might unwind.

To take note of, on Tuesday Robin Hardy at Shore Capital weighed in on UK homebuilders, saying the sell-off in the sector over the last couple of weeks had eliminated the over-valuation seen in the larger housebuilders.

Nevertheless, he cautioned that: "we see that there is an important distinction to be understood here – while the larger house builders are no longer looking at expensive, they are not cheap and we can see little or no case for considering adopting a positive stance on Barratt Developments, Persimmon or Taylor Wimpey at the lower share prices."

On a more positive note, Hardy "stressed" his 'buy' recommendation on Crest Nicholson (Fair value: 607p) and that he saw "a material potential gain at Redrow" (Fair value: 466p).

Berkeley Group Holdings remained "attractive" in his view but was likely to be held back by concerns around the London market.