London stocks extended declines as Swiss lender Credit Suisse’s drop to a record low in the aftermath of Silicon Valley Bank’s collapse sparked a wide sell-off in banking shares.
The blue-chip FTSE 100 was down 2.7%, hitting its lowest level so far this year with almost all FTSE 350 sectors trading in the red.
UK banks resumed their brutal selloff following Tuesday’s brief respite, falling 5.3%, after Credit Suisse hit record lows as the bank’s largest shareholder said it would not buy more stake on regulatory grounds..
Shares of HSBC, Europe’s largest lender slid 5%, while Standard Chartered and Barclays both dropped over 7%.
Britain’s economy is set to avoid a recession in 2023, but will still contract this year, finance minister Jeremy Hunt said, as he made a budget speech which included measures to speed up economic growth.
Credit Suisse sheds nearly 25%, key backer says no more money
“The UK economy is going to face by all accounts something that feels a lot like a recession over the course of this year,” said Luke Bartholomew, senior economist at abrdn.
Traders are now seeing a 60% chance of the Bank of England keeping interest rates as they are at its policy meeting next week.
The oil and gas sector shed 6.4% as oil prices fell over 2%.
The more domestically focussed FTSE 250 midcap index also lost 2.08%, with IG Group falling 6.9% after the online trading platform said its quarterly active clients fell.
Prudential dropped 10.3% despite the Asia-focused insurer reporting an 8% jump in full-year profit. The company’s chief financial officer, James Turner, also said the insurer had a $1 million exposure to Silicon Valley Bank, which was “minimal” against a total debt book of $23 billion.
The wider life insurance index slumped 7.2%, hitting a more than three-month low.
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