FTSE 100 banking stocks make gains after two Italian banks are bailed out – Telegraph.co.uk

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  • Banking shares rise after £14.9bn bailout deal 
  • Brent crude rise helps the FTSE 100 open the week in positive territory
  • Asian stocks finish up with energy and technology shares leading the drive
  • Pound climbs against the dollar and euro after weekend of gains

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Mediclinic only healthcare stock in FTSE 100 not in positive territory 

Healthcare stocks are among the biggest risers on the FTSE 100 today as the Republican-controlled Congress attempts to reform the Affordable Care Act. AstraZeneca shares have benefited the most, seeing a 1.45pc increase, as the sector hopes reform will mean further deregulation. However, Bloomberg is reporting that the reform is lacking the support of some Republican moderates.

Mediclinic is the only stock in the sector currently down after Investec downgraded it from buy to hold. Its share price fell by 0.92pc, or 7p, to 750.00p.

Gold price still to recover from morning crash

The price of gold plummeted to $1235.95 per ounce this morning before partially recovering. It is still down 1.29pc on last night’s high but has now stabilised around the 1241 per ounce mark.

Lunchtime summary

  • DUP deal to prop up Theresa May’s government pushes pound up after brief drop, now flat against the dollar.
  • Brent crude gains pared after price nudges over $46 per barrel in the morning.  Energy stocks still up despite the weakening price.
  • Banking stocks in the UK and Europe are up after the Italian government pledged $14.9bn to save two of its banks. Italian bank Intesa has seen its share price increase the most from the news.

Currencies

GBP/USD: 1.2723 (+0.05pc)

GBP/EUR: 1.1386 (+0.25pc)

Stock markets

FTSE 100: 7,475.10 (+0.69pc)

FTSE 250: 1,9744.05 (+0.30pc)

Euro Stoxx 50: 3,579.90 (+1.02pc)

CAC 40: 5,323.44 (+1.09pc)

DAX: 12,837.68 (+0.82pc)

More reaction from the Italian bank bailout

“The Italian banking situation has long been a background concern for its European peers, the issue every now and again bubbling to the surface to spook the markets. The bailout, then, has been greeted with relief by the sector as a whole, even if it has sparked anger from more than a few MEPs, especially in Germany,” said Spreadex analyst Connor Campbell.

Pound rises after confirmation of DUP deal

The confirmation that the DUP has signed a ‘confidence and supply’ agreement with the government has sent the pound back into positive territory against the dollar. After making early gains against the greenback the pound did briefly drop but is now 0.15pc up. Investor reaction will likely be shaped by the details behind the deal, little of which have been released.  Arlene Foster, has, however, said that propping up Theresa May’s government will mean an extra £1bn in funding for Northern Ireland and added that there will be no changes to the state pension triple lock or winter fuel payments.

Crude’s momentum begins to slow

Brent crude’s momentum is slowing as its price dips back below the $46 per barrel mark. It’s still 3pc ahead of the ten-month low it hit last Wednesday  production increased in Nigeria and Libya. JP Morgan now believes that the price will drop below $50 per barrel next year and is more pessimistic on the price for the remainder of 2017. Prices have dropped on the back of stocks data that showed the overhang in supply is proving difficult to budge.

Price of Brent

Oil momentum begins to slow

Pound falls after making early gains

After making gains overnight and during the morning, the pound is now down against the dollar. The internationally-focused FTSE 100 has been boosted by the fall, now 53.1 points up, 0.72pc up, at 7,477.22.

Pound during trading

Pound falls after making early gains
Such a move could be destabilising in the short term though it may be positive for markets in the medium term as Hammond would put greater weight on the economy in negotiating Brexit, and is in favour of a much softer Brexit than Theresa May.

Going back to how the week’s political news may affect the markets, Sun Global Investments chief executive has said that making chancellor Phillip Hammond prime minister could help the markets despite the instability it would cause.

A deal between Theresa May’s administration and the DUP is now expected to be finalised by lunchtime. What concessions the government will have made to the Northern Irish unionist party will likely drive a lot of the markets movement this week.

Nestle shares soar after hedge fund reveals stake

Shares in food and drink conglomerate Nestle have hit a record high this morning after being targeted by activist investor Daniel Loeb and his hedge fund Third Point. The hedge fund revealed that it has taken a 1.3pc stake in the company and has proposed selling the company’s stake in L’Oreal and increasing debt to boost profit margins. Its share price has risen by 4.45pc during the morning, hitting a peak of 86.00 Swiss francs.

Chocolate bars

Nestle has been targeted by Daniel Loeb’s hedge fund

UK banks among FTSE 100 risers

UK banks are also up following the Italian bank bailout. Barclays shares have risen the most out of the five banks featured on the FTSE 100, seeing a 2.08pc rise in its share price.

MUFJ analyst Darek Halpenny said investor confidence is unlikely to be impacted too much as it was still “unclear whether the template used here over the weekend is something that could be replicated on a wider scale”.

European bank shares up after Italy bailout

European banking stocks are among the top performers on the  Euro Stoxx 50 after the news that Italy will commit £14.9bn to bailout Banca Popolare di Vicenza and Veneto Banca. 

Shares in Italian banking group Intesa rose by 3.52pc during morning trading following the news. BBVA and Societe Generale saw 1.62pc and 1.57pc rises respectively.

Bloomberg said in their report:

The intervention at Banca Popolare di Vicenza and Veneto Banca includes state support for Intesa Sanpaolo to acquire their good assets for a token amount, finance minister Pier Carlo Padoan said on Sunday after an emergency cabinet meeting in Rome. Milan-based Intesa can initially tap about €5.2bn to take on some assets without hurting capital ratios, Mr Padoan said. The European Commission said it approved the plan.

Read the full report on the Italian bank bailout here

Pound starts week well ahead of outcome of DUP deal

Although the pound has started the week well, it could face turbulence later on in the week with Mark Carney scheduled to speak on Wednesday and the outcome of the government’s negotiations with the DUP due. 

“As the week goes on any signs as to whether or not the Prime Minister will be able to gather the required DUP votes to ensure she stays in power is going to be the main driver of trading for the pound,” said Spreadex analyst Connor Campbell.

He added:

The UK’s post-election political uncertainty potentially comes to a head this week, with the parliamentary vote on the Queen’s speech, and therefore May’s ability to form a government, likely coming on Thursday. 

On Wednesday, the pound is also likely to react to the ECB Central Bank forum where Bank of England governor Mark Carney and ECB president Mario Draghi are due to speak. It will be Mr Carney’s first speech since the Bank of England’s chief economist Andy Haldane said that he would likely back an interest rate rise later this year to head off the threat of inflation.

Pound during morning trading:

GBP/USD: £1.2744

GBP/EUR: £1.1392

Co-op Bank no longer up for sale as rescue plan deal draws closer

The Co-op Bank has said it is no longer up for sale as it hopes a rescue plan with its hedge fund owners is near. 

The troubled lender, which has previously said that it needs an injection of £750m to plug a capital shortfall, put itself up for sale in February as it sought to avoid being wound down by the regulator. 

The lender said that the rescue plan would enable it to continue as a stand-alone entity and “safeguard the Bank’s values and ethics”.

In an update on its discussions with its owners, the bank said: “Given the advanced nature of the proposal [to rescue the bank], the board has decided to discontinue the formal sale process under the Takeover Code. The bank is, therefore, no longer in an ‘offer period’ for the purposes of the Takeover Code.” 

Read the full story by Jon Yeomans here

Crude oil gains help FTSE 100 open up after longest run of weekly losses in a year last week

Good Morning and welcome to our live markets coverage.

Brent crude has nudged over the $46 per barrel mark despite data showing that shale drilling in the United States continued to increase. Oil has climbed for the third day in a row after entering a bear market last week.

This has helped the FTSE 100 open up after recording the longest run of weekly losses in a year.

Asian markets have now closed with oil gains also helping stocks there end higher.  Energy companies helped offset drops in financial shares in Japan and a continued recovery in technology stocks also helped the Nikkei close slightly up. 

NKY: +0.10pc

HSI: +0.68pc

SHZ300:+1.25pc

Previewing the action in Europe, Accendo Markets analyst Mike Van Dulken cautioned that the stronger pound could hinder the FTSE 100 while a weak euro may help the blue chip Dax in Germany outperform its UK counterpart.

Mike Van Dulken, Accendo Markets analyst:

 A positive opening call comes courtesy of a positive session in Asia to start the new trading week and oil recovering more of last week’s lost ground, although we caution that Crude prices have yet to convince that they can overcome their falling channels of the last month.

The pound is up against the dollar and euro as DUP leader Arlene Foster  continues negotiations in London over supporting Theresa May’s government. 

On the corporate side, we have full-year results from business park operator Sirius Real Estate but little else scheduled. There is also not much going on in the economics calendar with the IFO Business Climate Index in Germany the most anticipated release of the day.