More than £50bn wiped off FTSE 100 amid banking stock sell-off

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More than £50bn of ore was wiped off Britain’s biggest stock market on Monday after the second and third biggest bank failures in US history spooked investors worldwide.

The collapse of the tech-focused Silicon Valley bank raised fears on Wall Street that the banking system was being crippled by a continuous cycle of rising interest rates.

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This has prompted the Federal Reserve to reconsider its plans and leave interest rates unchanged at the next meeting, in hopes of calming global markets.

Shockwaves were sent across the UK and Europe, despite HSBC swooping in to buy the bank’s UK branch and reassuring the firms that banking services would continue as normal.

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The FTSE 100 saw a major drop following September’s mini-budget in what one analyst described as “the worst day the markets have ever seen”.

It fell more than 2.6% at one point during Monday’s trading, sharper than the 2.5% trough it recorded on Sept. 23.

Large banks Standard Chartered and Barclays were at the bottom of the index.

It closed down 199.72 points, or 2.58%, at 7,548.63, and meant that around £51.5 billion was wiped off the value of the index during the day.

Meanwhile, US investors found some respite from President Joe Biden’s assurance that the country’s financial systems were safe and sound.

“Americans can be confident that the banking system is safe. Your deposits will be there when you need them,” the leader told Americans.

That meant America’s biggest stock exchanges were in the green by the time European markets closed, with the S&P 500 up 0.35% and the Dow Jones up about 0.1%.

It promises to be a roller-coaster week, with markets at risk of further downside due to Tuesday’s US consumer price inflation (CPI) and Thursday’s European Central Bank rates decision

Other top European markets ended the day worse than Britain, with the German DAX falling more than 3% and the French CAC 40 down 2.9%.

Chris Beauchamp, chief market analyst at online trading platform IG, said: “US stocks have had a busy start to the week but have managed to post gains overall as actions from US regulators provide some comfort to worried investors.

“The same can’t be said for Europe, which is deep in the red as traders on this side of the Atlantic wait to see whether the pressure on European banks will become something that forces authorities to step in.” Needed.

“It promises to be a roller-coaster week, thanks to Tuesday’s US consumer price inflation (CPI) and Thursday’s European Central Bank rates decision, leaving markets at risk of further downside.”

The pound was stable despite the stock market woes and was up almost 1% against the US dollar at 1.215 and up 0.1% against the euro at 1.1318.

In company news, HSBC saw its share price fall by more than 4% despite the announcement that it will acquire the UK business of Silicon Valley Bank (SVB) in an all-important rescue deal.

Europe’s biggest bank said it paid just £1 for the troubled bank, indicating regulators were confident it could easily take on any risk from SVB UK customers.

However, its share price closed 4.1% lower as the stock got caught in investor jitters in the broader banking sector.

Meanwhile, insurer Direct Line admitted its 2022 results were “disappointing” and that the group had not navigated the challenges of inflation and regulatory reform as effectively as it would have liked.

The group reported a full-year pre-tax loss of £45 million set against inflation by sharp claims, particularly in its motor arm. Its share price closed down 4.8%.

The biggest risers on the FTSE 100 were Endeavor Mining, up 70p to 1,720p, Fresnillo, up 25.2p to 747.4p, Severn Trent, up 58p to 2,824p, Convatec Group, up 3.8p to 220.6p, and Admiral Group, up 30.5 p to 1,912p.

The biggest losers on the FTSE were Standard Chartered, down 51p to 688.8p, Barclays, down 9.94p to 147.48p, Beazley, down 36.5p to 545p, Ashted Group, down 340p to 5,192p and Ocado Group, down 27.3p. 423.8p.

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