Market report

FTSE 100 sinks as investors sell out of banks

4.30pm: Markets plunge

The FTSE 100 plummeted 292.66 points (3.83%) to 7,344.45 as markets across Europe took fright from growing concerns around the banking sector.

Shares in Credit Suisse were temporarily suspended this morning after valuations across the European banking sector took a nosedive.

Credit Suisse fell as much as 30% after its largest shareholder said it could not provide further support, prompting the Swiss bank’s chief executive to make new assurances on its financial strength.

Bank shares tumbled across Europe, with Barclays, Germany’s Commerzbank, France’s BNP Paribas and Societe Generale shedding up to 11% of their value.

The FTSE 100 fell nearly 300 points

Neil Birrell, chief investment officer at Premier Miton, told the Financial Times that nervous investors “were right to worry” about Credit Suisse following the collapse of Silicon Valley Bank.

“These aren’t all isolated cases, the fear of contagion is clear,” he said. “Credit Suisse has been in a somewhat shaky state for some time, it’s not surprising you’ve got people running for the hills.”

Insurer Prudential was 10% lower despite the Asia-focused insurer reporting an 8% jump in full-year profit on the back of new insurance sales and China’s relaxation of Covid restrictions.

The company said adjusted operating profit rose 8% to $3.38 billion, above expectations of $3.34bn.

New boss Anil Wadhwani said 2023 has “started well with encouraging progress in year-on-year sales.”

Annualised premium equivalent (APE) sales rose 15% for the first two months of the current year from the same period a year ago, he added.

The board announced its 2022 second interim dividend of 13.04 US cents per ordinary share.

The insurer has now completed the move of its entire senior management team from London to Hong Kong – its new global headquarters – which is closer to its revenue sources.

“In Hong Kong we have seen a gradual increase in cross-border traffic from the Chinese Mainland as travel restrictions are eased,” Mr Wadhwani said, adding demand for savings products in Hong Kong business was driving the sales increase.

7am: Bloomsbury

Publishing group Bloomsbury said fantasy novels and academic digital resources were driving sales and revenue for the year to the end of February is now expected to exceed £260 million.

Profit before tax and highlighted items is expected to be some £30 million.

Nigel Newton, chief executive, said the group had enjoyed “excellent trading” for the year.

“We have seen strong demand for our titles – in print, ebook and audio – and continued digital growth. Two of our strongest performances in the year have come from very disparate ends of our publishing strategy – fantasy novels on the one hand and academic digital resources on the other – showing how well our balanced consumer and academic portfolio is working in practice.

“Throughout a year which has been characterised by rising inflation and cost of living pressure, it is notable that reading remains hugely popular throughout the world with books regarded by many readers as an affordable pastime.”

6am: Shop sales rise

Retail sales in Scotland grew by a modest inflation-adjusted 0.6% in February, year-on-year for the fourth consecutive month.

However, David Lonsdale, director of the Scottish Retail Constortium, said the challenges for retail are “far from being in the rear-view mirror”.

He added: “The costs crunch affecting households and firms could make for a bumpy few months ahead.”

Paul Martin, partner and UK head of retail at KPMG, which helps to produce the monthly sales monitor, said: “Consumers continue to hold back on non-essential spending as household budgets remain squeezed.

“The outlook continues to be challenging with falling consumer spending in real terms and, as more people choose to shop by ‘occasion’, retailers will be pulling out the stops for a buoyant Easter and Mothers’ Day.”

Global markets

Wall Street investors responded positively to inflation data and banks bounced back after a weekend of turmoil over the failure of two specialist lenders.

February’s consumer price index report revealed the cost of living in the US continued to ease last month, signalling a less aggressive approach to interest rate rises.

First Republic shares surged 27%, a day after falling 62%, as regional banks clawed back some of the heavy losses in the previous session’s SVB-fuelled sell-off. JP Morgan Chase and Goldman Sachs were also higher.

Regulators are handling the fallout of the failure of SVB and Signature. Having taken control of SVB last week, the Federal Deposit Insurance Corporation is looking at sales of its assets.

At the close, the Dow Jones Industrial Average was up 1.06%, easily reversing losses recorded in the previous session, while the S&P 500 advanced 1.65% and the Nasdaq Composite saw out the session 2.14% firmer.

In Tokyo, the Nikkei 225 ended slightly higher, while in China, the Shanghai Composite was up 0.6% in afternoon trade and in Hong Kong, the Hang Seng index surged 1.5%.

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