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London open: Stocks gain as bank sector fears ease; Ocado rallies
London stocks gained in early trade on Tuesday as worries about the banking sector continued to ease.
At 0830 BST, the FTSE 100 was up 0.6% at 7,516.76.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “A relief ripple is helping stocks make some gains amid hopes that the volatility, which has wracked the banking sector, has eased off.
“The purchase of large chunks of Silicon Valley Bank’s assets by First Citizens has steadied nerves but some caution is set to remain about potential repercussions. With contagion limited for now, hopes that the debacle will have less of an impact on global growth have ticked up a little. Reports that the flow of deposits from smaller lenders to larger banks in the United States has slowed also appear to have helped sentiment.
“Right now, worries about the impact of banking turmoil are taking a back seat and the Bank of England is intent on steering consumer prices lower. Governor Andrew Bailey stressed in his speech in London last night that interest rates may have to move higher if there were signs of persistent inflationary pressure. For now, policymakers don’t see a threat to financial stability in the UK, given that banks are resilient with robust capital positions.”
Investors were mulling industry data out earlier which showed that food prices continued to soar in March, pushing shop price inflation higher.
According to the BRC-NielsenIQ Shop Price Index, annual shop price inflation hit a new high of 8.9% in March, from 8.4% in February.
Within that, non-food inflation was 5.9% compared to 5.3% a month earlier, while food inflation surged to 15% from 14.5% in February. It is the highest food inflation rate on record.
Fresh food inflation also hit a new high, rising to 17% from 16.3% a month earlier, while ambient food inflation rose to 12.4% from 12%.
Helen Dickinson, chief executive of the British Retail Consortium, warned: “Shop price inflation has yet to peak. As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March.
“Fruit and vegetables also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.
“Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.”
In equity markets, banks were higher again, with Barclays, NatWest, Standard Chartered and Lloyds all up.
Ocado was the standout performer on the FTSE 100 after it said that Ocado Retail – its 50:50 joint venture with Marks & Spencer – saw a jump in first-quarter revenues and that it remained on track to return to sales growth and profitability.
The online grocer said retail revenues rose 3.4% in the 13 weeks to 26 February, to £583.7m, with average orders per week ahead 3.6% year-on-year at 381,000.
BA and Iberia owner IAG flew higher after an upgrade to ‘buy’ from ‘neutral’ at Redburn.
Bellway advanced after the housebuilder reported a fall in half-year profits against a tough economic backdrop and announced a £100m share buyback as customer demand improved in the current calendar year, helped by a seasonal uplift and a fall in mortgage rates.
Softcat surged after saying it expects the outturn for the full year to be “slightly ahead” of previous estimates following outperformance in the first half.
On the downside, United Utilities was under the cosh after it trimmed its full-year revenue outlook, while Synthomer tanked as its full-year results fell short of expectations.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Limited | +1.74% | +41.00 | 2,402.50 |
| 2 |  |
Bp Plc | +1.69% | +8.40 | 504.80 |
| 3 |  |
Marks And Spencer Group Plc | +1.58% | +2.45 | 157.55 |
| 4 |  |
International Consolidated Airlines Group S.a. | +1.54% | +2.12 | 139.36 |
| 5 |  |
Glencore Plc | +1.53% | +6.90 | 456.50 |
| 6 |  |
Sainsbury (j) Plc | +1.42% | +3.70 | 265.00 |
| 7 |  |
Anglo American Plc | +1.36% | +34.50 | 2,573.50 |
| 8 |  |
Standard Chartered Plc | +1.28% | +7.60 | 600.00 |
| 9 |  |
Shell Plc | +1.28% | +28.50 | 2,261.00 |
| 10 |  |
Halma Plc | +1.13% | +24.00 | 2,141.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -47.82% | -661.40 | 721.60 |
| 2 |  |
Ocado Group Plc | -3.72% | -16.80 | 435.30 |
| 3 |  |
Hargreaves Lansdown Plc | -2.82% | -22.20 | 766.20 |
| 4 |  |
Carnival Plc | -2.30% | -15.00 | 637.60 |
| 5 |  |
Direct Line Insurance Group Plc | -2.27% | -3.20 | 137.80 |
| 6 |  |
Centrica Plc | -1.50% | -1.55 | 101.80 |
| 7 |  |
Segro Plc | -1.45% | -10.40 | 706.80 |
| 8 |  |
St. James’s Place Plc | -1.27% | -15.00 | 1,165.00 |
| 9 |  |
Rightmove Plc | -1.27% | -7.00 | 544.20 |
| 10 |  |
Fresnillo Plc | -1.11% | -8.00 | 713.40 |
US close: Stocks mixed as bank fears recede
Major indices delivered a mixed performance on Monday as both the Dow Jones and S&P 500 built on last week’s gains and put banking sector fears in the rear view mirror.
At the close, the Dow Jones Industrial Average was up 0.60% at 32,432.08, while the S&P 500 advanced 0.16% to 3,977.53 and the Nasdaq Composite saw out the session 0.47% weaker at 11,768.84.
The Dow closed 194.55 points higher on Monday, extending gains recorded in what was a winning week that came despite heightened volatility as a result of the Federal Reserve’s latest interest rate hike and ongoing uncertainty in the banking sector both at home and abroad.
America’s banking system remained in focus on Tuesday, with news that deposit outflows from small banks to industry giants like JPMorgan Chase and Wells Fargo had slowed in recent days drew an amount of investor attention and seemingly boosted sentiment somewhat.
News that policymakers were mulling over the idea of expanding an emergency lending program for banks, giving embattled lender First Republic more time to shore up its liquidity, was also in focus, as was word from the Federal Deposit Insurance Company that stated First Citizens Bank had agreed to buy large parts of Silicon Valley Bank – including approximately $72.0bn of SVB assets at a discount of $16.5bn.
Across the pond, Deutsche Bank, which stumbled shortly after the Swiss government forced UBS to takeover rival Credit Suisse, also traded higher on Monday.
On the macro front, the Dallas Federal Reserve‘s general business activity index slipped 5.1 points to -13.5 in February, down from a reading of -8.4 in January and the tenth straight month of contraction. The new orders index was negative for a ninth month in a row, while the production index, a key measure of state manufacturing conditions, edged down from 0.2 to -2.8 – suggesting a modest contraction in output.
Still to come, Federal Reserve economist Philip Jefferson said the central bank was “still learning” what exactly the impacts of tighter monetary policy and warned that trouble among small and regional banks could impact small businesses across the US.
In the corporate space, Lyft shares rallied in extended trading after the rideshareing giant named its new chief executive and revealed that its co-founders will step away from their day-to-day roles with the firm.
Tuesday newspaper round-up: Royal Mail, private renters, Inmarsat
Long-running talks between Royal Mail and the Communication Workers Union are on the brink of collapse, with the company’s board thought to have threatened to put the loss-making postal service – the regulated UK entity that delivers to every address in the country – into a form of administration if a deal cannot be agreed. A politically explosive move to declare the postal service insolvent is regarded by Royal Mail’s board as a last resort but has been raised with the union already. – Guardian
Private renters face paying an additional £1bn in gas and electricity bills because of delays in the introduction of new standards forcing landlords to make their properties more energy efficient. The government has been criticised for dragging its feet on enacting new proposals that would require landlords to improve properties to at least a C rating under the energy performance certificate (EPC) scheme. – Guardian
Andrew Bailey has blamed a wave of early retirement for forcing up interest rates and inflation as Britain battles the steepest price rises of any large rich country. The Governor of the Bank of England said that a sharp decline in the number of people in the workforce was “part of the reason why we have had to raise Bank Rate by as much as we have”. – Telegraph
A combined OneWeb and Eutelsat is set to list on the London Stock Exchange this year in a boost to the government’s attempts to secure more large tech listings. Sunil Bharti Mittal, the Indian billionaire telecoms tycoon and executive chairman of OneWeb, whose conglomerate rescued the satellites company three years ago alongside the British government, said a secondary listing was a commitment negotiated by ministers, as part of plans for OneWeb to merge with Eutelsat of France, that “we will deliver”. – The Times
Revenue at Inmarsat rose by 9 per cent last year to $1.47 billion, propelled by the satellite communications company’s aviation business as the travel industry opened up after the pandemic. Its earnings before interest, tax and other charges jumped by 15 per cent to $850 million in 2022, despite component shortages hitting the availability of satellite phones. – The Times
