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London open: Stocks fall again; UK jobs data in focus
London stocks fell again in early trade on Tuesday, having sold off heavily in the previous session amid concerns about the fallout from the collapse of Silicon Valley Bank, as investors mulled the latest UK jobs data.
At 0840 GMT, the FTSE 100 was down 0.5% at 7,510.06.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Those niggling concerns that mild recessions could be on the way have been replaced by a wall of worry about runs on smaller banks like First Republic, and the risk that larger institutions may turn more risk averse to lending amid this volatility, prompting deeper downturns.
“The feared knock-on effect for the global economy is showing up in a falling oil price. Brent crude futures have dropped below $80 a barrel, to a level not seen since early February. Gold prices, considered to be a hedge against economic uncertainty, is holding above $1900 an ounce, after jumping 2% on Monday.
“The bond markets have whipsawed in reaction to the banking sell-off, with the market now expecting that the Federal Reserve will be forced into go-slow on further rate hikes or even press pause this month, to restore financial stability.”
Streeter said the US consumer price index for February, due at 1230 GMT, will be “watched super-closely as another hot reading will reinforce expectations that a rate rise, albeit smaller, will be on the cards next week”.
On home shores, the latest figures from the Office for National Statistics showed that the unemployment rate was stable on the quarter in the three months to January, at 3.7%. Economists were expecting a slight uptick to 3.8%.
Meanwhile, wage growth slowed for the first time in more than a year. Average earnings growth excluding bonuses fell to 6.5% from a year earlier, from 6.7% in the previous three-month period.
The figures also revealed that the economic inactivity rate declined by 0.2 percentage points on the quarter to 21.3%. The ONS said the drop was driven by people aged 16 to 24 years.
The number of working days lost to strike action was 220,000 in January, down from 822,000 in December 2022.
Darren Morgan, director of economic statistics at the ONS, said: “The number of working days lost to strikes fell in January from the very high level seen in December. Nevertheless, many days were still lost, with education the most affected sector.”
In December 2022 to February 2023, the number of job vacancies fell by 51,000 on the quarter to 1.22m. This was the eighth consecutive decline and the ONS said it reflects “uncertainty across industries”, with survey respondents citing economic pressures as a factor in holding back recruitment.
In equity markets, merchant bank Close Brothers slid after saying it had said been a “challenging” first half, and posting a drop in profits as it was hit by provisions related to the Novitas loan book.
In the six months to the end of January 2023, operating profit before tax slumped 91% to £11.7m, coming in well below consensus expectations of £33.3m. Adjusted operating profit slid 90% to £12.6m.
Interdealer broker TP ICAP was also in the red even as it lifted its dividend and reported a jump in full-year profit, boosted by increased market volatility.
In the year to the end of December 2022, adjusted pre-tax profit rose to £226m from £177m the year before, on revenues of £2.1bn, up from £1.9bn. The total dividend per share was hiked to 12.4p from 9.5p.
On a statutory basis, pre-tax profit increased to £113m from £24m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Land Securities Group Plc | +1.65% | +10.20 | 628.00 |
| 2 |  |
Rolls-royce Holdings Plc | +1.49% | +2.16 | 147.16 |
| 3 |  |
Segro Plc | +1.16% | +9.00 | 784.00 |
| 4 |  |
Spirax-sarco Engineering Plc | +1.15% | +125.00 | 11,005.00 |
| 5 |  |
British Land Company Plc | +0.82% | +3.30 | 407.90 |
| 6 |  |
Bae Systems Plc | +0.81% | +7.40 | 915.40 |
| 7 |  |
United Utilities Group Plc | +0.81% | +8.50 | 1,053.00 |
| 8 |  |
Severn Trent Plc | +0.67% | +19.00 | 2,843.00 |
| 9 |  |
National Grid Plc | +0.61% | +6.50 | 1,070.50 |
| 10 |  |
Centrica Plc | +0.53% | +0.55 | 104.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | -2.15% | -14.80 | 674.00 |
| 2 |  |
Phoenix Group Holdings Plc | -2.03% | -12.00 | 580.00 |
| 3 |  |
Glencore Plc | -1.86% | -8.55 | 450.15 |
| 4 |  |
Hsbc Holdings Plc | -1.62% | -9.20 | 558.90 |
| 5 |  |
Bp Plc | -1.55% | -8.10 | 514.40 |
| 6 |  |
Hiscox Ltd | -1.48% | -16.50 | 1,097.00 |
| 7 |  |
Shell Plc | -1.46% | -35.50 | 2,402.50 |
| 8 |  |
Johnson Matthey Plc | -1.42% | -29.00 | 2,008.00 |
| 9 |  |
Bhp Group Limited | -1.42% | -35.50 | 2,462.50 |
| 10 |  |
Antofagasta Plc | -1.23% | -18.50 | 1,482.00 |
Tuesday newspaper round-up: SVB, Country Garden, pensions
SVB Financial Group and two top executives have been sued by shareholders over the collapse of Silicon Valley Bank, as global stocks continued to suffer on Tuesday despite assurances from US president Joe Biden. The bank’s shareholders accuse SVB Financial Group chief executive Greg Becker and chief financial officer Daniel Beck of concealing how rising interest rates would leave its Silicon Valley Bank unit “particularly susceptible” to a bank run. – Guardian
China’s top property developer expects to record a loss in 2022 – its first since the company went public in 2007 – in another blow for the country’s embattled property sector. In a filing to the Hong Kong stock exchange, Country Garden said that the losses for 2022 would amount to between 5.5bn yuan and 7.5bn yuan (£663.6m-£904.9m). In 2021 Country Garden’s profits reached 26.8bn yuan. – Guardian
Jeremy Hunt is preparing to boost the tax-free allowance for pensions by more than half a million pounds as he battles the wave of early retirement that has squeezed growth. The so-called lifetime allowance (LTA) – which is the maximum amount of money workers can put in their pensions before they are taxed – is expected to be lifted from just over £1m in the Chancellor’s maiden Budget. – Telegraph
Older people have not stopped working since the pandemic because of ill-health or to look after their grandchildren but because they can afford to retire early, a think tank has claimed. There are about 516,000 more economically inactive people in Britain now than there were before Covid, about 60 per cent of whom are aged between 50 and 64, according to the Centre for Policy Studies. – The T|imes
The government has been urged to invest in green technologies to create a “jobs engine” that could help the country to hit its net zero targets. Britain could create up to 1.6 million jobs over the next ten years if it emulates the United States and the European Union with a plan for investing in renewable energy sources and other green infrastructure, according to the Institute for Public Policy Research. – The Times
