London's FTSE-100 share index leapt 2.5% yesterday as Standard Chartered provided some desperately needed relief from the slew of bad news from UK-based banks.
London's FTSE-100 share index leapt 2.5% yesterday as Standard Chartered provided some desperately needed relief from the slew of bad news from UK-based banks.
Asia-focused Standard Chartered's forecast-beating 31% leap in interim pre-tax profits to $2.59bn sent its shares surging 8% to 1542p and other UK-quoted banks bathed, at least for a moment, in its glory. The City brushed off the latest grim batch of news from collapsed-then-nationalised mortgage bank Northern Rock to push embattled banking stocks higher.
Bank of Scotland and Halifax parent HBOS enjoyed a 12%, or 36.5p, leap in its shares to 336.25p. James Invine, banking sector analyst at Dresdner, put a "buy" rating on HBOS shares.
Invine said that Dresdner saw bad-debt charges at HBOS continuing to rise in 2009 and a reshaping of the business would likely prove a "drag on revenue growth".
However, he added that "a lot of credit-quality pain is already factored into the share price" and, referring to upward repricing of mortgage rates and HBOS's plans to look at the sale of parts of its business, Invine declared: "Newsflow could provide a boost."
Shares in Royal Bank of Scotland, tipped by the City to post on Friday a £1bn-plus interim pre-tax loss which observers say would be the biggest in UK banking sector history, leapt 7%, or 15.5p, to 230.5p yesterday.
Barclays rose nearly 9%, or 30p, to 369.25p, and Lloyds TSB advanced 31.25p, or nearly 11%, to 324.5p.
Shares in HSBC enjoyed a more modest 3%-plus advance - rising by 27.75p to 855.75p.
Buoyed by a strong start on Wall Street and a fall in benchmark US light crude to an intra-day low of $118 a barrel, its lowest level since May 5, the FTSE-100 index of leading shares finished up 134.3 points on the session at its intra-day high of 5454.5 points. However, in spite of this rise, it was last night down 16% on where it started 2008.
Oil was pushed lower again yesterday by the deteriorating global economic outlook. Tropical Storm Edouard meanwhile made landfall in Texas without any particularly nasty surprises for Gulf of Mexico oil infrastructure, and this also helped keep a lid on crude.
New York's Dow Jones Industrial Average last night finished 331.62 points higher at 11,615.77.
The Dow was up more than 200 points ahead of the US Federal Reserve's announcement at 7.15pm UK time that it was holding its benchmark Fed funds rate at 2%.
