14th Mar 2023 11:59
(Alliance News) - Stock prices in London were slightly higher at midday in London on Tuesday, as market attention turns to a US inflation reading, which has taken on new significant following the collapse of Silicon Valley Bank.
The FTSE 100 index was up 4.44 points, 0.1%, at 7,553.07. The FTSE 250 was up 22.70 points, 0.1%, at 18,847.78, but the AIM All-Share was up 1.74 points, 0.2%, at 820.90.
The Cboe UK 100 was down marginally at 755.72 points, and the Cboe UK 250 was down 0.2% at 16,470.27. The Cboe Small Companies was up 0.3% at 13,664.15.
"The FTSE 100 may have been dragged lower by index heavyweights on Tuesday morning, but there was a sense some calm had been restored to markets after a bruising few sessions," says AJ Bell investment director Russ Mould.
SVB-contagion worries continued to hit London's banking stocks. Standard Chartered was down 2.0%, HSBC down 1.3%, and Lloyds down 0.2% at midday.
"While the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector isn't helped by the latest revelations from Credit Suisse as it identified material weaknesses in reporting controls."
Credit Suisse shares lost another 4.4% in Zurich on Tuesday. They had dropped 9.6% on Monday as SVB-related concerns sent the firm's credit default swaps sharply higher. A CDS is an instrument that an investor can turn to in order to protect themselves from payment default.
Credit Suisse's belated annual report said it has found "material weakness" in its internal control over financial reporting, adding more pressure to the troubled bank.
Among other FTSE 100 fallers on Tuesday were London Stock Exchange Group, down 1.5%, and chemicals firm Johnson Matthey, down 1.4%.
The US consumer price index reading for February is due at 1230 GMT. The US inflation rate is expected to have ebbed to 6.0% in February from 6.4% in January.
"Given expectations have been ratcheted back for interest rate increases amid concern the current rate hiking cycle is starting to break things in the financial system, the markets, the Federal Reserve and politicians will be desperate to see an easing of inflationary pressures," AJ Bell's Mould said.
In the wake of the SVB debacle, the Federal Reserve is expected to lift interest rates at a slower pace than stock market investors had assumed earlier this month. But a hot inflation reading would make a smaller hike more problematic.
The next Fed policy meeting is on Tuesday and Wednesday next week. The US central bank last raised interest rates by 25 basis point, a quarter percentage point.
The dollar was on the up ahead of the US inflation data.
The pound was quoted at USD1.2148 at midday on Tuesday in London, slightly lower compared to USD1.2157 at the equities close on Monday. The euro stood at USD1.0716, down against USD1.0737. Against the yen, the dollar was trading at JPY134.08, up compared to JPY133.25.
The UK unemployment rate was unchanged at the start of the year, beating expectations of a slowdown, figures on Tuesday showed.
According to the Office for National Statistics, the UK jobless rate was 3.7% in the three months to January, unchanged from the three months to December. The reading topped an FXStreet cited forecast of a slight rise in the unemployment rate to 3.8%.
Annual growth in average total pay, including bonuses, was 5.7% and growth in regular pay, excluding bonuses, was 6.5%.
Growth in total pay was in line with FXStreet-cited market consensus and slowed from 6.0%. Regular pay growth came in below consensus of 6.6% and slowed from 6.7% in the three months to December.
Pay growth still outpaced by inflation. The UK annual inflation rate for January was 10.1%.
In London's FTSE 250, TP ICAP lost 8.8%.
The London-based financial services firm said revenue in 2022 rose 13% to GBP2.12 billion from GBP1.87 billion in 2021. Pretax profit jumped to GBP113 million from GBP24 million
TP ICAP lifted its final dividend by 44% to 7.9 pence per share. This took its total annual payout to 12.4p per share, up 31% from 9.5p a year prior.
Looking ahead, TP ICAP said it expects the impact of inflation on the business in 2023 to be broadly mitigated by its focus on cost efficiencies.
Close Brothers shed 4.1%. It said half-year profit declined amid provisions at Novitas, a provider of loans for legal proceedings.
Pretax profit in the six months to January 31 plunged 91% year-on-year to GBP11.7 million from GBP128.9 million. Novitas provisions during the half totalled GBP114.6 million.
Novitas was acquired by Close Brothers for around GBP31 million in 2017. In 2021, Close Brothers decided to permanently cease the approval of lending to new customers across all the products offered by Novitas and withdraw from the legal services financing market.
On AIM, Blue Star Capital surged 39% on an update concerning its SatoshiPay investee.
Blockchain company Pendulum releases its 'Spacewalk' blockchain bridge, which aims to bridge the gap between the decentralized finance and traditional fintech services sectors.
"Pendulum is committed to advancing foreign exchange trading into the blockchain space to integrate a tranche of the USD6.6 trillion traded daily in forex markets. It is hoped that the Spacewalk bridge will serve as critical infrastructure to bring stablecoin liquidity required for forex trading to Pendulum," Blue Star explains.
Blue Star has a 28% stake in SatoshiPay, which in turn has a 5.5% interest in Pendulum's future tokens.
In European equities on Tuesday, the CAC 40 in Paris was up 0.3% in early afternoon trade, and the DAX 40 in Frankfurt was up 0.6%.
Stocks in New York were called higher. The Dow Jones Industrial Average and S&P 500 were both called up 0.3%, and the Nasdaq Composite up 0.2%. On Monday, the DJIA closed down 0.3% and the S&P 500 down 0.2%, whilst the Nasdaq Composite advanced 0.5%.
Brent oil was quoted at USD79.35 a barrel at midday in London on Tuesday, down from USD81.23 late Monday. Gold was quoted at USD1,903.98 an ounce, down slightly against USD1,904.07.
By Sophie Rose, Alliance News reporter
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