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FTSE 100 set for big fall after Wall Street volatility
The FTSE 100 index is expected to open more than 1% lower today as traders react to last night’s slump for Wall Street banking stocks.
The US sell-off came after SVB Financial, a major Silicon Valley-focused lender, launched a stock offering of around $2 billion to strengthen its balance sheet.
The move led to jitters across the sector as shares in Bank of America, JP Morgan Chase and Wells Fargo fell by more than 5%.
Uncertainty over the interest rates outlook added of this afternoon’s monthly non-farm payrolls report also fuelled the risk averse session as the S&P 500 index slumped almost 2%.
The FTSE 100 index lost 0.6% yesterday and is forecast by IG to open 111.3 points or 1.4% lower at 7768 this morning.
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Berkeley says house prices ‘firm’ but ‘volatility in market’ means it will keep ‘cautious approach’
Berkeley, the London-focused housebuider, has said house prices stayed ‘firm’ and above the levels in its business plan, in the aftermath of September’s mini-Budget, reflecting the “underlying demand” for quality homes in the capital and the south east.
In a trading update that covered November last year to the end of February, Berkeley said trading was in line with its guidance issued in December, which identified a sales drop of a quarter since the end of September.
The builder of the Broadway East development in Bethnal Green and Camden Goods Yard added that overall pricing from November “remained firm and “above business plan levels” and pointed to “early signs” of moderating building cost inflation.
“Whilst the prevailing volatility in the market persists, Berkeley will continue to match supply to demand, adopting a cautious approach to releasing new phases to the market as we focus on the quality of our forward sales,” it said.
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GDP up by 0.3% in January
The UK economy grew by a 0.3% in January, according to the Office for National Statistics, exceeding City expectations.
ONS Director of Economic Statistics Darren Morgan said the return of school and Premier League football were among the factors contributing to the growth.
“The economy partially bounced back from the large fall seen in December,” he said. “Across the last three months as a whole and, indeed over the last 12 months, the economy has, though, showed zero growth.
“The main drivers of January’s growth were the return of children to classrooms, following unusually high absences in the run-up to Christmas, the Premier League clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month. Postal services also partially recovered from the effects of December’s strikes.
However, the construction sector did not perform so well.
“These were somewhat offset by a notable drop in construction with a slowdown in infrastructure projects and housebuilding having another poor month, partly due to heavy rainfall,” Morgan said.
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Silicon Valley Bank shares crash amid reports of cash crisis
Shares in Silicon Valley Bank tumbled over 60% yesterday amid reports the firm was struggling through a severe cash crisis.
SVB launched a stock offering of around $2 billion to strengthen its balance sheet amid reports a number of firms were scrambling to take funds out of the bank.
California-based SVB funds a large number of major fintechs both in the US and the UK, with reports fintech leaders are rushing to chat with their investors over how to navigate the situation.
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, said: “The collapse of Silvergate Capital and a severe rout in SVB stock plunged the banking sector into darkness yesterday.
“ While Silvergate Capital’s fall was mainly crypto-related and didn’t spur worries for the rest of the banking sector, SVB’s plunge fueled fears that the rest of the banks could also experience similar issues. “
