MARKET REPORT: Pound Hits Highest Level in Nearly a Year and Global Stock Markets Rise After US Bank Stocks Plunge and Interest Rates Rise Again
The pound hit its highest level in nearly a year and global stock markets rallied at the end of a week in which US bank stocks plummeted and interest rate setters ushered in another round of hikes.
After days of market turmoil, the British pound rose to $1.2650 as investors bet that this week’s rate hike by the US Federal Reserve would be the last.
In contrast, the Bank of England is expected to raise interest rates from 4.25% to 4.5% as it continues its battle against inflation.
The dollar later reversed some losses as positive job data, which showed employment rising by a better-than-expected 253,000 in April, underlined the resilience of the US economy.
On the stock market, the FTSE 100 rose 0.8 percent, or 64.09 points, to 7766.73 while the FTSE 250 gained 0.8 percent, or 153.53 points, to 19,298.44.
Bounces back: The pound hit its highest level in nearly a year
Such gains were mirrored around the world, with the Dax up 1.2 percent in Frankfurt and the Cac up 1.2 percent in Paris. In the US, on Wall Street, the S&P 500 gained 1.5 percent, the Dow Jones 1.3 percent and the technology-intensive Nasdaq 1.7 percent.
There was also a respite for US regional bank stocks, which recovered some losses.
After crashing 50 percent to a record low on Thursday, shares in California’s PacWest rose more than 55 percent in early trading. Arizona’s Western Alliance and Memphis-based First Horizon also recovered after losing more than 30 percent in the previous session.
London banks also rose as NatWest rose 2.7 percent or 6.9 pence to 259.3 pence, Barclays rose 3 percent or 4.44 pence to 152.68 pence and Lloyds rose 1.4 percent or 0.63 pence to 45.98 pawn. The oil price recovered to about $74 a barrel. That boosted BP by 3.4 per cent to 16.35 pence to 493 pence, while Shell, which reported a record first-quarter profit of £7.7 billion on Thursday, added 2.2 per cent or 51.5 pence to 2397 pence.
Ithaca Energy has signed an agreement with Shell on the sale of the oil giant’s 30 percent interest in the Cambo field. Ithaca, which floated at 250 pence in London last year, rose 0.9 percent or 1.4 pence to 153.8 pence.
Hilton Food Group, which sends meat and ready meals to supermarkets, gained 3.8 percent, or 27 pence, to 732 pence after HSBC reiterated its buy recommendation and raised its target price from 820 pence to 1,050 pence.
As Hilton tries to improve the profitability of its UK fishing business, HSBC said it’s “the worst behind the business.”
There was less to cheer for Numis after the City agent reported a drop in turnover and profit. Sales fell 14 percent to £63.8 million in the six months to the end of March, alongside a 55 percent drop in profits to £6 million. Alex Ham and Ross Mitchinson, Numis’ co-chief executives, warned that capital markets volumes are “likely to remain relatively low in the near term.”
The results came just a week after Deutsche Bank agreed to buy Numis for £410 million. Numis was flat at 341p.
Property website On The Market has signed an agreement to give one of the UK’s largest estate agents access to its Telect platform. The deal will see Arun Estates use its software for all of its rental activities. Shares gained 4.3 percent, or 3 percent, to 73.5 pence.
Safety equipment maker Halma agreed to buy Sewertronics, which uses ultraviolet technology to repair sewer pipelines, for around £36 million. Shares fell 0.1 percent, or 2p, to 2390p.
TPX Impact, the business advisory firm, raised its annual forecasts based on two major deals. It expects sales for the year to March next year to grow between 15 and 20 percent. Shares rose 1.2 percent, or 0.5 pence, to 42 pence.