Reliance on banks and other blue-chip stocks continues to this day after the collapse of Silicon Valley Bank.
London’s FTSE 100 index fell 2.5% on Monday amid turmoil in the banking sector, shedding 0.5% due to lower energy shares and further selling of banking assets.
Elsewhere today, the Office for National Statistics said the unemployment rate in the three months to January was unchanged at 3.7%, compared with the city’s expectation of 3.8%.
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FTSE recoups most of this week’s losses in afternoon rally
The FTSE 100 gained over 120 points in the last six hours, moving back to 7635.
Despite a rough start to the day as the index edged towards yearly lows, it gained momentum as the day progressed. During the afternoon, a steady decline in US inflation may have eased investor concerns about further rate hikes.
Rolls-Royce was easily the day’s biggest gainer, with its shares rising 7.4%, followed by Barclays, which gained 3.5%.
Moody’s downgrades entire US banking system after Silicon Valley bank turmoil
Moody’s has downgraded the entire US banking system in the wake of the collapse of Silicon Valley Bank last week as it warned of a sharp decline in investor confidence.
The credit rating agency said it has changed its rating from stable to negative amid concerns over capital flight from small and medium-sized institutions.
Moody’s said, “The rapid and substantial decline in bank depositor and investor confidence highlighted by this action is the risk from rapidly rising interest rates in asset-liability management (ALM) of US banks.
“Banks with substantial unrealized securities losses and with non-retail and uninsured US depositors may still be more vulnerable to depositor competition or eventual flight, with adverse effects on funding, liquidity, earnings and capital. ”
Budget 2023: Retail, brewing and beauty trade bodies draw up wish lists
Trade bodies that represent a range of companies that collectively employ over 1.7 million people in the brewing, beauty and retail sectors have drawn up their wish list for the spring budget.
Businesses have made a common plea to Chancellor Jeremy Hunt ahead of Wednesday’s budget that more support for apprenticeship schemes is on retailers’ wishlist, while sweeping business rates reforms.
Helen Dickinson of the British Retail Consortium said: “The government should make changes to the apprenticeship levy to allow retailers to invest more effectively in training higher skilled, more productive and better paid workers.”
Meta will cut another 10,000 jobs
Meta is to cut another 10,000 jobs and eliminate 5,000 vacancies, as the social media giant grapples with declining advertising revenue amid tough economic conditions.
In an update to employees, Meta boss Mark Zuckerberg told employees that he would begin restructuring plans focused on flattening teams, canceling low-priority projects and reducing hiring rates.
“It will be tough and there is no way around it. It will mean saying goodbye to talented and passionate colleagues who have been a part of our success.”
Zuckerberg continued: “At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years. The weaker the economy from higher interest rates, the more geopolitical instability.” leads to greater volatility, and increased regulation slows growth and increases the cost of innovation.
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US inflation comes in at 6%
US inflation eased to 6% in February, in line with expectations.
Core inflation, which removes food and energy prices, was 5.5%. On a month-on-month basis, prices increased by 0.4%.
Richard Carter, head of fixed interest research at Quilter Cheviot, said the move would calm markets, especially as the demise of Silicon Valley Bank could make the Fed more hesitant about further rate hikes.
“US inflation continues to decline and suggests that actions by the Federal Reserve are doing their job in bringing it down, while not propelling the economy into recession. However, core inflation remains troubling and more stable than many, leaving more rate hikes on the table,” he said. “Inflation will continue to be the key driver of decision-making for the Fed, but events of recent days are starting to weigh on market sentiment, and there are risks that under the bonnet, the US economy is under stress.
“However, the Fed will be pleased that this inflation report has no gremlins and should help calm things down after a very uncertain situation last week.”
Small cap spotlight: Profit growth for software firms
UK small cap software businesses are defying the economic downturn and showing continued signs of rapid growth.
Marketing software business Eagle Eye today reported a 32% jump in sales to £20 million for the six months ended December, while gross profit rose 35% to £18.8 million.
Meanwhile, financial data control and cash management software business Gresham Technologies said it saw a 32% jump in revenue to £48.7 million for the year ending December, while pre-tax profit stood at £3.2 million on the previous year. Many times more came. million.
Ian Manocha, CEO of Gresham, said: “This has been a decade-long growth journey, and we are turning cash flow down for the first time.
“In a software business you reach a tipping point where operating leverage occurs.
“Where we’re getting the margins we expect from a large global software business.”
Eagle Eye shares rose 4.8% to 600p. Gresham’s shares were up 0.9% to 162p.
BusinessLDN: Chancellor must unlock London’s growth to drive UK economy
BusinessLDN has presented its budget to Chancellor Jeremy Hunt, arguing that measures to unlock capital such as reforming rates and VAT-free shopping will also help drive growth nationwide.
John Dickie, CEO of the cross-sector business body, said the organization aimed to focus on a smaller number of targets, as it recognized it would be difficult to ask for a longer list of wants.
“The chancellor is going into this budget with very limited room for manoeuvre, so we can’t go in with a huge shopping list,” he said. “We focused on some changes.”
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Silicon Valley bank collapse sends shock waves through global markets
The collapse of the Silicon Valley bank sent further shockwaves around the global financial sector, with tens of billions wiped off the stock market value of some of the world’s largest banks and credit rating agency Moody’s threatening to downgrade several medium-sized institutions. notice was given for ,
As fears over the stability of Silicon Valley banks surfaced for the first time on Thursday, an astonishing $46 billion was wiped from the market capitalization of the six biggest US banks by the close of the market on Wall Street last night, while euro swap spreads widened. Which is a financial indicator. Market tension reached its highest level in five months.
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CMA: ASDA’s buyout of co-operative petrol stations could lead to price hikes
The Competition and Markets Authority (CMA) has poured cold water on ASDA’s plan to buy 132 Co-op petrol stations, finding the deal could increase prices at 13 locations, including two in London.
The CMA said the deal “raises competition concerns” in 13 locations, including Caledonian Road and East Peckham, where ASDA is already considered a “significant alternative” to customers.
“Groceries and fuel form a major part of most household budgets. As the cost of living continues to rise, it is especially important that deals that reduce competition between groceries and fuel suppliers do not make the situation worse,” said Colin Raftery, CMA’s senior director of mergers.
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Why did Silicon Valley Bank collapse? And how did HSBC save its UK branch?
Outside of tech circles, Silicon Valley Bank was relatively unknown in the UK. Now, its name is on the lips of nearly everyone in the business, following its sudden collapse — and swift rescue of its depositors — following a weekend of high drama.
A wave of fear gripped global financial institutions on Friday night at a weekend of crisis talks with Chancellor Jeremy Hunt, Prime Minister Rishi Sunak and Bank of England Governor Andrew Bailey.
Who Is Silicon Valley Bank And How Did It Fail?
Credit: www.standard.co.uk /