Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
London midday: Stocks fall further but Shell in the black on results
(Sharecast News) - London stocks had extended losses by midday on Thursday amid renewed concerns about the US bank sector, as investors mulled the latest rate hike from the Federal Reserve, looked ahead to a policy announcement from the European Central Bank and waded through a deluge of earnings. The FTSE 100 was down 0.9% at 7,716.28.
Worries about US banks were playing on investors' minds again as PacWest Bancorp tumbled 50% in after-hours trading after saying it was considering its strategic options, including a sale.
Russ Mould, investment director at AJ Bell, said: "Investors have been praying for central banks to stop raising interest rates for some time, but the strongest possible hint yet from the Federal Reserve that it will stop increasing the cost of borrowing doesn't seem enough to put them in a good mood," says Russ Mould, investment director at AJ Bell.
"The Fed's 0.25 percentage point hike last night was widely expected, so that won't have been the cause of putting markets in a bad mood. However, the central bank did send signals that it may pause further increases in rates against uncertainties regarding the state of the economy and the banking sector.
"So why didn't stock markets rally? Many investors thought falling inflation would be the principal reason why the Fed would pivot. That's not the case now. Under the current circumstances, the Fed is more likely to pause rate hikes because the US faces the prospect of a recession and in light of more banks struggling. Therefore, not a reason to celebrate.
"The state of the banking sector is the one to watch as that has been the key worry point for markets this year. Just as we thought the crisis was past its worst, PacWest shares tumbled yesterday, raising the prospect that it might be the next US bank to seek a buyer or raise new capital. This news is enough to have put a chill on the markets."
On home shores, a survey showed the service sector saw its fastest growth in a year in April.
The S&P Global/CIPS purchasing managers' index for the sector rose to 55.9 from 52.9 in March, coming in above the first estimate of 54.9. This marked the fastest rate of growth since April last year.
Survey respondents said that stronger consumer spending was a factor boosting business activity, especially those operating in the travel, tourism and leisure sub-sectors. There were also reports citing a turnaround in demand for business services, despite pressure on budgets from intense cost inflation.
Elsewhere, data from the Bank of England revealed that mortgage approvals jumped in March, indicating that the housing market was starting to stabilise.
According to the BoE's latest money and credit report, mortgage lending to individuals fell from a net flow of £0.7bn in February to net zero in March, the lowest level outside of the pandemic since June 2011.
But net mortgage approvals - a key indicator of future borrowing - rose significantly, to 52,000 from 44,100 in February. Consensus had been for around 46,000 net mortgage approvals.
In equity markets, St James's Place, Glencore, Hiscox and Admiral all fell as they traded without entitlement to the dividend.
BAE Systems also lost ground even as the defence contractor said that trading so far this year has been in line with expectations, with "continued good operational performance".
Virgin Money was under the cosh as it posted lower first-half profit due to an increase in impairment charges for bad debts and higher investment costs.
On the upside, Hargreaves Lansdown rallied after a well-received first-quarter update, while clothing and homeware retailer Next rose as it backed full-year guidance and posted a smaller-than-expected drop in first-quarter sales.
Oil giant Shell gained as it beat forecasts to post a first-quarter net profit of $9.65bn, although down 2% year-on-year due to lower oil and gas prices.
Trainline surged to the top of the FTSE 250 after saying it saw full-year sales and profits recover to above their pre-Covid levels, driven by a rebound in UK consumer and international consumer net ticket sales.
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity, Equity & Inclusion | Doing Business with Fidelity | Diversity, Equity & Inclusion Reports | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Staying secure | Statutory and Regulatory disclosures | Whistleblowing policy
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.