European stocks rebound as investor jitters calmed
The FTSE 100 jumped by more than 1% on Tuesday following declines sparked by the collapse of Silicon Valley Bank.
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Your support makes all the difference.The UK’s top stocks have clawed back some of the losses suffered on Monday after the collapse of Silicon Valley Bank prompted a global sell-off of banking stocks.
The FTSE 100 jumped by more than 1% on Tuesday afternoon, marking a rollercoaster session for the stock exchange which started the day firmly in the red.
But London’s top index did not manage to fully offset the 2.6% decline on Monday, which saw more than £50 billion wiped off its total value.
The failure of the tech-focused lender in the US sparked fears that the national’s financial system was beginning to buckle under the weight of a relentless series of interest rate rises.
It led some analysts to predict the Federal Reserve could leave the base rate unchanged at the next monetary policy meeting in efforts to stabilise the global economy.
But President Joe Biden sought to reassure Americans that the banking system was sound and people’s deposits were safe.
With US banking stocks seeing widespread gains, there is distinct feeling of confidence that we will not see widespread issues arise throughout the financial sector
Nevertheless, he promised to look at new banking regulations to make it less likely that such a large bank failure can happen again.
London’s top banking stocks like Standard Chartered, Barclays and HSBC had returned to growth on Tuesday after sinking into the red at the start of the week.
The FTSE 100 closed 88.48 points higher, or 1.17%, at 7,637.11.
Other European stocks managed to rebound after seeing even greater declines than the UK, with the German Dax moving 1.83% higher and the French Cac up 1.86%.
US investors started the day’s trading on a positive note, with the S&P 500 up 1.2% and Dow Jones up 0.65% when European markets closed.
Joshua Mahony, senior market analyst at online trading platform IG, said: “Market sentiment appears to have a turn for the better today, with equities throughout Europe and the US moving higher despite ongoing concerns over the health of the banking sector.
“The demise of Silicon Valley Bank brought concerns of further contagion throughout regional banks, leading to widespread calls over who could be the next to fall.
“However, while there are likely to be others which will have to write down bond market investments, parallels to the global financial crisis should be limited.
“With US banking stocks seeing widespread gains, there is distinct feeling of confidence that we will not see widespread issues arise throughout the financial sector.”
The pound slipped on Tuesday and was down by around 0.3% to 1.215 against the US dollar and down 0.1% to 1.1341 euros by the time markets closed.
In company news, Sainsbury’s said it has agreed to buy the freeholds of 21 supermarkets in a deal worth more than £430 million.
The premises were previously rented by the supermarket giant and they will continue to run as Sainsbury’s stores. Its share price was up by 1.1% at close.
Meanwhile, Virgin Wines told investors that it lost about £1.5 million in revenue over Christmas after being forced to cut off sales a week earlier than usual, partly because of the freezing cold weather and postal strikes.
The retailer said its revenue dropped by 17% over the year, as it noted a shift in consumer confidence following the pandemic which was a good period for delivery-based companies.
Investors were gloomy about the trading update and the company’s share price closed 7.2% lower.
The biggest risers on the FTSE 100 were Rolls-Royce Holdings, up 10.2p to 155.2p, Ocado Group, up 17.4p to 441.2p, Hargreaves Lansdown, up 31p to 808.6p, St James’s Place, up 42p to 1,198p, and Centrica, up 3.55p to 107.5p.
The biggest fallers on the FTSE 100 were Fresnillo, down 10.8p to 736.6p, National Grid, down 5p to 1,059p, Imperial Brands, down 9p to 1,911p, British American Tobacco, down 13.5p to 3,000p, and Severn Trent, down 12p to 2,812p.