(Alliance News) - Stocks in London were called to open higher on Monday, as investors look past the recent turbulence in the banking sector.
"It appears that the banking crisis is more of a confidence crisis than a fact-based panic – as it was the case in 2007 when banks really had a bunch of toxic assets in their balance sheets," said Swissquote Bank's Ipek Ozkardeskaya.
"But confidence is the bread and butter of the banking sector. And watching the 166-year-old Credit Suisse go under did no good to anyone last Monday."
Banking stocks closed last week sharply lower, with Deutsche Bank bearing the brunt of the losses, falling 8.5% on Friday, as the price of its credit default swaps shot up. The stock is down 22% so far in 2023.
Nevertheless, investors seem somewhat relieved the dramatic events of the prior weekend with Credit Suisse were not repeated with Deutsche Bank this past weekend.
In the US, First Citizens Bancshares on Monday said it has agreed to purchase all loans and deposits from Silicon Valley Bank, whose collapse this month sparked global fears about the sector.
SVB, a key lender to the tech industry since the 1980s, became the biggest US bank to fail since 2008 when regulators seized it after a sudden run on deposits.
Regulators created Silicon Valley Bridge Bank from SVB after the collapse, and that entity will be taken over by First Citizens from Monday.
Raleigh, North Carolina-based First Citizens said it had agreed to purchase "substantially all loans and certain other assets, and assume all customer deposits and certain other liabilities of Silicon Valley Bridge Bank."
In early UK company news, AstraZeneca reported positive test results for eplontersen, and Tortilla Mexican Grill swung to an annual loss.
Monday's economic calendar has the Ifo German business climate index report at 0900 BST. Bank of England Governor Andrew Bailey speaks at 1800 BST.
The week picks up pace with a US consumer confidence reading on Tuesday, US GDP on Thursday, and eurozone inflation on Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 77.0 points, 1.0%, at 7,482.45
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Hang Seng: down 0.8% at 19,752.51
Nikkei 225: up 0.5% at 27,510.50
S&P/ASX 200: closed up 0.1% at 6,962.00
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DJIA: closed up 132.28 points, 0.4%, at 32,237.53
S&P 500: closed up 0.6% at 3,970.99
Nasdaq Composite: closed up 0.3% at 11,823.96
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EUR: up at USD1.0767 (USD1.0753)
GBP: up at USD1.2236 (USD1.2222)
USD: up at JPY130.83 (JPY130.69)
Gold: down at USD1,972.78 per ounce (USD1,984.10)
Oil (Brent): up at USD75.18 a barrel (USD74.07)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
10:00 CEST Germany Ifo business climate index
09:30 BST UK capital issuance statistics
11:00 BST UK CBI distributive trades survey
18:00 BST UK BoE Governor Andrew Bailey speaks
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UK airports, power stations and business headquarters are set to be hit hardest by property tax changes when new valuations come into force next week, according to research. Revenue from business rates – the property tax on commercial buildings – is expected to rise by GBP1.4 billion, or 4.9%, to GBP29.9 billion when the changes take effect from Saturday April 1. The annual review by real estate advisory firm Altus Group has revealed that a raft of firms will be hit sharply by the increase, which comes after a new revaluation regime was announced last year.
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The UK economy is 4% is smaller than if the country had remained in the EU, the chair of the Office for Budget Responsibility said. Richard Hughes said the effect of Brexit on the economy is on the "magnitude" of the coronavirus pandemic and rising energy prices, and the country is seeing the "biggest squeeze on living standards" on record. He told the BBC's Sunday With Laura Kuenssberg programme: "But we do expect, as we get past this year and we go into the next three or four years, that real income starts to recover. "But it's still the case that people's real spending power doesn't get back to the level it was before the pandemic even after five years, even by the time we get to the late 2020s."
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Turkey stopped oil exports from Iraq's autonomous Kurdistan region on Saturday following arbitration at the International Chamber of Commerce, the Iraqi oil ministry said. "Turkey has informed the authorities of Iraqi Kurdistan of a stop to imports," Assem Jihad, spokesman for the ministry, told AFP. Iraqi officials overseeing exports via Turkey's Ceyhan port noted pumping stopped at "12:35 pm on March 25, 2023", according to a document the authenticity of which the spokesman confirmed. There has been no confirmation from Turkish authorities.
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BROKER RATING CHANGES
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Panmure cuts Centamin to 'hold' - price target 111 pence
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COMPANIES - FTSE 100
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AstraZeneca announced positive high-level results from its Neuro-TTRansform phase III trial for eplontersen. The trial explored the treatment for use in hereditary transthyretin-mediated amyloid polyneuropathy. "At 66 weeks, patients treated with eplontersen continued to demonstrate a statistically significant and clinically meaningful change from baseline versus an external placebo group," Astra said. Eplontersen is an investigational medicine, which targets the reduction the production of transthyretin protein.
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COMPANIES - FTSE 250
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Target Healthcare REIT reported a fall in portfolio value during its half year to December and cut its annual dividend target. The investor in care homes said its portfolio market value fell 4.8% to GBP867.7 million at December 31 from GBP911.6 million six months before. This was mostly due to a fall in value of its like-for-like portfolio of 5.5%. Its net asset value total return was minus 5.4% during the six-month period, compared to positive 3.4% a year before. EPRA net tangible assets fell 8.3% to 103.0 pence from 112.3p in June. Rental income rose to GBP34.0 million from GBP26.4 million year-on-year, however. Target Healthcare REIT swung to a pretax loss of GBP34.2 million from a profit of GBP18.7 million a year before. It maintained its interim dividend of 3.38p, but rebased its annual dividend target to 5.60p, a reduction of 17%. This will provide "a sustainable dividend level which will be fully covered by earnings whilst allowing for annual growth", it explained. Separately, Target Healthcare REIT announced the disposal of four care homes in Northern Ireland, which generated an internal rate of return above 10% over the period of ownership.
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Sirius Real Estate named Chris Bowman as its new chief financial officer, joining the real estate investment firm from August 29. Bowman joins from Berenberg, where he led the UK investment banking arm. Prior to this, he spent seven years in investment banking at Liberum. Interim CFO Alistair Marks will continue in his principal role as chief investment officer once Bowman joins. Marks will step down from the board at the firm's annual general meeting in July, but will continue to lead its investment strategy across Germany and the UK, Sirius said.
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OTHER COMPANIES
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US activist investment firm Elliott Management is planning to take over beleaguered cinema chain Cineworld's operations outside of the UK and the US, Sky News reported on Saturday. Citing "insiders", Sky News said that Elliott has tabled a bid for the Brentford, London-based firm's operations in eastern Europe and Israel. Elliott had also explored a bid for the whole of Cineworld, but its most recent proposal excludes its UK and US operations, Sky said. A month ago, Cineworld said it has received non-binding proposals from a number of counterparties for some or all of its businesses, but the debt-ridden business expected any deal with its creditors will wipe out its shareholders.
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Tortilla Mexican Grill said revenue in the year that ended January 1 rose 20% to GBP57.7 million from GBP48.1 million, "driven by a record year of new site openings". It added 18 sites net to its portfolio, bringing the total number to 82 at the end of the year. Like-for-like revenue was up 16% from 2019 levels, the Mexican food chain said. However, it swung to a pretax loss of GBP928,549 from a profit of GBP2.3 million. This was as admin expenses climbed 19% to GBP43.6 million from GBP36.5 million. In the period since the year's end, trading has been in line with expectations, and the board is confident of meeting market expectations for 2023. "We know that restaurants that offer great, consistent food at competitive price points will always be the winners in our sector, and we are confident that we sit very comfortably in this space," said CEO Richard Morris.
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By Elizabeth Winter, Alliance News senior markets reporter
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