London close: Stocks rise as calm returns to markets

(Sharecast News) - London stocks closed in positive territory on Tuesday, as market participants welcomed a renewed sense of calm following recent unrest in the banking sector. Investors were eagerly awaiting rate decisions from the Federal Reserve, the Bank of England, and the Swiss National Bank.

The FTSE 100 index rose 1.79% to close at 7,536.22, while the FTSE 250 index recorded a 1.54% gain, finishing the day at 18,779.10.

In currency markets, sterling weakened against both the dollar and the euro, falling 0.68% to last trade at $1.2194, and dropping 1.07% to change hands at €1.1328.

"Monday's rebound off the lows has continued, as regulators and officials provide further vocal support for the banking sector," said IG chief market analyst Chris Beauchamp.

"While the problems at SVB and Credit Suisse had been dealt with, markets had remained edgy.

"But today's comments about supporting the banking sector have provided a solid foundation for more gains in risk assets."

There was, however, still the chance that the Federal Reserve delivers a hawkish message tomorrow, Beauchamp cautioned, although traders appeared to be betting that the risk of such a statement and move could deliver a killer blow to the rally.

"As such, tomorrow's meeting is the real hurdle for markets to navigate, but a dovish Fed could open the floodgates for further upside, even given the unsettling events of the past two weeks."

UK government borrowing soars

In economic news, UK government borrowing reached an all-time high for the month of February as energy support schemes drove public sector net borrowing to £16.7bn, a significant increase from £7.1bn in February last year, and surpassing consensus expectations of £11.4bn.

It marked the highest borrowing level for February since records began in 1993, although debt interest payments dropped by £1.3bn year-on-year to £6.9bn.

Chancellor Jeremy Hunt emphasised the government's commitment to supporting households and businesses amid rising prices, while also highlighting efforts to reduce inflation, stimulate economic growth, and decrease debt.

"The news on the public finances may have raised the Chancellor's hopes that he will be able to announce a pre-election giveaway later this year," said Ruth Gregory, deputy chief UK economist at Capital Economics.

"But the big risk is that a further escalation in the banking crisis causes a deterioration in the fiscal outlook as the hit to the public finances from weaker economic growth is only partially cushioned by lower gilt yields."

On the continent, construction output across Europe experienced substantial growth in January compared to the previous month.

Eurostat data revealed a seasonally adjusted 3.9% increase in the eurozone and a 3.5% rise in the wider EU.

That followed a decline in December, when construction output fell 2.3% in the eurozone and 2.0% in the EU.

Year-on-year data also exhibited growth, with a 0.9% increase in the euro area and a 1.4% increase in the EU compared to January of the previous year.

In Germany, the ZEW Center for European Economic Research reported that business sentiment in the country declined more than anticipated in March, fueled by concerns surrounding the banking crisis.

The headline ZEW investor expectations index dropped to 13.0 from 28.1 a month earlier, defying economists' expectations of a decline to 17.1.

Additionally, the current conditions index fell 1.4 points to -46.5.

Finally on data, US second-hand home selling activity surged in February, marking the largest increase since July 2020 as prices dipped.

The National Association of Realtors reported that existing home sales rose by 14.5% month-on-month in February, reaching an annual pace of 4.58 million, exceeding economists' predictions of a sales pace of 4.2 million.

Banking stocks rebound, Kingfisher and Pearson dip

On London's equity markets there was a recovery in the banking sector, with NatWest Group, Barclays, Lloyds Banking Group, and Standard Chartered all experiencing gains.

NatWest Group saw a 5.66% increase, Barclays rose 4.97%, Lloyds Banking Group climbed 4.46%, and Standard Chartered advanced 4.65%.

The positive performance for the sector followed recent turmoil around serious liquidity concerns on both sides of the Atlantic.

Elsewhere, TI Fluid Systems shares rallied by 6.69% after Jefferies upgraded the company to a 'hold' from 'underperform' rating, primarily based on valuation grounds.

The share price had dropped around 20% since January.

On the downside, B&Q and Screwfix owner Kingfisher saw a 1.46% decline in share price as it reported a drop in full-year profit, in line with its guidance.

Adjusted pre-tax profit for the year through January fell 20.2% to £758m, with sales down 0.9% to £13.1bn.

Educational publisher Pearson's share price dipped 1% after announcing the sale of its Online Learning Services (POLS) operation to private equity firm Regent for a deferred sum, as part of a strategic business review.

Precious metals miners Endeavour Mining, Fresnillo, and Centamin experienced declines as gold prices fell, with share prices dropping 3.88%, 3.92%, and 6.36%, respectively.

"Gold is pulling back for a second day, paring gains as some calm returns to markets and yields move higher," said Oanda market analyst Craig Erlam.

"It's performed extremely well over the last couple of weeks, aided by a sharp decline in bond yields, a softer dollar, and a dash for safety so it makes sense that it's giving some of that back."

Utilities companies also faced setbacks, with Severn Trent, United Utilities Group, and National Grid shares down by 1.44%, 1.28%, and 1.14%, respectively.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,536.22 1.79% FTSE 250 (MCX) 18,779.10 1.54% techMARK (TASX) 4,528.02 1.48%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 150.00p 6.40% NATWEST GROUP (NWG) 272.40p 5.66% Prudential (PRU) 1,065.00p 5.19% Ashtead Group (AHT) 5,118.00p 5.18% Barclays (BARC) 143.14p 4.97% Standard Chartered (STAN) 643.60p 4.65% Lloyds Banking Group (LLOY) 48.16p 4.46% Flutter Entertainment (CDI) (FLTR) 14,320.00p 4.26% Sainsbury (J) (SBRY) 262.40p 4.21% Schroders (SDR) 467.60p 3.93%

FTSE 100 - Fallers

Fresnillo (FRES) 714.00p -3.92% Endeavour Mining (EDV) 1,760.00p -3.88% Kingfisher (KGF) 269.30p -1.46% Severn Trent (SVT) 2,808.00p -1.44% United Utilities Group (UU.) 1,043.00p -1.28% SEGRO (SGRO) 744.00p -1.22% National Grid (NG.) 1,042.00p -1.14% Pearson (PSON) 831.00p -1.00% Anglo American (AAL) 2,601.50p -0.93% Croda International (CRDA) 6,372.00p -0.87%

FTSE 250 - Risers

4Imprint Group (FOUR) 5,090.00p 8.64% Carnival (CCL) 676.00p 7.27% Man Group (EMG) 241.10p 6.87% TI Fluid Systems (TIFS) 98.80p 6.69% Molten Ventures (GROW) 311.40p 6.57% Intermediate Capital Group (ICP) 1,241.50p 6.43% Tullow Oil (TLW) 29.26p 6.01% JTC (JTC) 676.00p 5.96% Bank of Georgia Group (BGEO) 2,580.00p 5.74% Bridgepoint Group (Reg S) (BPT) 206.00p 5.53%

FTSE 250 - Fallers

Centamin (DI) (CEY) 98.46p -6.36% Baltic Classifieds Group (BCG) 148.40p -4.63% BH Macro Ltd. GBP Shares (BHMG) 410.00p -4.43% Essentra (ESNT) 175.80p -3.72% Marshalls (MSLH) 301.60p -3.70% Aston Martin Lagonda Global Holdings (AML) 223.40p -3.33% Direct Line Insurance Group (DLG) 146.40p -3.14% Sirius Real Estate Ltd. (SRE) 72.30p -2.43% Safestore Holdings (SAFE) 937.50p -2.24% Wood Group (John) (WG.) 199.00p -2.21%