Citywire for Financial Professionals
Stay connected:

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.

 
Banks sell-off reignites to drag down FTSE

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.

Rio Tinto (RIO) rose 3.3% to £16.71, Anglo American (AAL) was up 6% at 266.5p and Antofagasta (ANTO) added 2.5% to 374.6p.

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.

6 comments so far. Why not have your say?

thinblackduke

Feb 03, 2016 at 12:02

Have I missed something? Why are banks being sold off? Oil companies and commodities, I completely get but banks? I am tempted to pile in at these prices, with dividends only due to increase but feel that I must have missed something!

report this

mikest

Feb 03, 2016 at 14:03

As some professor called Jeremy Seigel said: Volatility scares enough people out of the market to generate superior returns for those who stay in. I agree with him but it does take a fair bit of courage sometimes!

report this

JEL G

Feb 03, 2016 at 17:12

There are a lot of tasty yields in the FTSE350 awaiting purchase by the bold contrarian investor.

report this

thinblackduke

Feb 03, 2016 at 17:29

There are lots of "tasty yields" everywhere just now but lots of risk that they will be cut. An increase in Lloyds dividend is "guaranteed" and I'll be amazed if the price doesn't go above £1 in the next 3 years - particularly once the PPI claims are given a deadline. How can "global growth fears" have made them so cheap?!

report this

Ladysaver

Feb 04, 2016 at 02:28

I haven't touched banks for ages. Can't begin to understand their accounts. As a cautious investor, I'm wary of anything that calls debt an asset, and warier of annual accounts that are so physically thick that they cannot be sent out by Royal Mail, and cannot be understood by their own non-Execs.

Am I surprised that speculators (who call themselves "investors") are panicking and deserting banks? Er, not really, no.

report this

BOB 2

Feb 04, 2016 at 19:34

Lloyd's 62.77p up 3.43% 6 months down 27.14%

Barclay's 173.70 up 4.86% 6 months down 41.28%

HSBC 459.50P up 2.24% 6 months down 23.87%

RBS 241.80P up 3.87% 6 months down 33.28%

re DIGITAL LOOK ratings Nonetheless, and due to the impact which later rate increases would have on their net interest margins HSBC lowered its target prices on Barclays from 315p to 230p, on Lloyd's from 103p to 80p and for RBS from 360p to 260p. Toeman and Down kept their recommendation on shares of Barclays and Lloyds at 'buy' and that on RBS at 'hold'. - See more at: http://www.digitallook.com/news/broker-recommendations/hsbc-cuts-price-targets-for-barclays-lloyds-and-rbs--1022037.html#sthash.3L0w5rE9.dpuf

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: The sterling slump: what’s next?


After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news

More about this:

Look up the shares

  • Standard Chartered PLC (STAN.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Barclays PLC (BARC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HSBC Holdings PLC (HSBA.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Lloyds Banking Group PLC (LLOY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Hargreaves Lansdown PLC (HRGV.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Rio Tinto PLC (RIO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Anglo American PLC (AAL.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Antofagasta PLC (ANTO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Scottish Mortgage (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet