View the article online at http://citywire.co.uk/money/article/a877825
Banks sell-off reignites to drag down FTSE
Sell-off in banking stocks shows no sign of slowing, dragging down the FTSE 100, while Scottish Mortgage trust takes a hit.
Update: The sell-off in banking stocks since the start of the year shows no signs of slowing, with a fresh slump in financials weighing on the FTSE 100.
The UK blue-chip index fell 95 points, or 1.6%, to 5,826 with banks among the biggest fallers. They included Standard Chartered (STAN), down 4.7% at 412.6p, Barclays (BARC), which dropped 4.8% at 165.4p and HSBC (HSBA), 4.2% lower at 448.3p. Lloyds (LLOY) fell 2.1% to 60.6p.
Banks have been among the worst hit by the market sell-off since the turn of the year, with the FTSE 350 Banks index down by 19% since 1 January.
They have been badly hurt by global growth fears, while a disappointing trading statement from RBS has sparked fears ahead of their reporting season, which kicks off later this month.
Chancellor George Osborne highlighted the extent of the sell-off when he was forced to postpone a planned sale of Lloyds shares to retail investors.
Hargreaves Lansdown (HRGV) was also among the fallers, down 2.4% at £12.86, as the online stockbroker reported a drop in profit margins and revealed the cost of its diversification into savings and peer-to-peer lending.
Markets were also hit by disappointing data from the US, as the Institute for Supply Management said its index of non-manufacturing activity fell to 53.5 in January, below expectations of a 55.1 reading. Any reading above 50 indicates expansion.
'This will only add to concerns the US Federal Reserve made a mistake by raising rates in December and that the American economy is losing momentum - and fast,' said Russ Mould, investment director at AJ Bell.
The news hammered the dollar, with the pound jumping 1.3% against the greenback to trade at $1.459. That helped commodities, which are priced in the dollar.
Miners were among the few stocks to make gains, as the copper price rose on fresh data showing China's services sector rose at its fastest pace in six months in January.
The FTSE 250 was even harder hit, falling 2%, with top-performing investment Scottish Mortgage (SMT ) among the hardest hit. Shares in the trust, which had stood at a 4% premium to net asset value at the start of the day's trading, tumbled 6.5% to 234.2p.
Some of the trust's largest holdings have been badly hit by a sell-off in US tech stocks, with Amazon (AMZN.O) down 3.6% and gene sequencing company Illumina (ILMN.O) down 7.7% after reporting a 32% drop in earnings.
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- Standard Chartered PLC (STAN.L)
- Barclays PLC (BARC.L)
- HSBC Holdings PLC (HSBA.L)
- Lloyds Banking Group PLC (LLOY.L)
- Hargreaves Lansdown PLC (HRGV.L)
- Rio Tinto PLC (RIO.L)
- Anglo American PLC (AAL.L)
- Antofagasta PLC (ANTO.L)
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by Gavin Lumsden on Sep 30, 2016 at 17:23