Proactive Investors -
- FTSE 100 opens lower, banks fall
- Unemployment steady, average wage growth falls
- Rolls-Royce (LON:RR) advances, Citi sets 255p price target
FTSE 100 lower but stable, US CPI to come
AJ Bell’s Russ Mould feels although the FTSE 100 may have been dragged lower by index heavyweights on Tuesday morning, “there was a sense some calm had been restored to markets after a bruising few sessions.”
But he noted “while the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector isn’t helped by the latest revelations from Credit Suisse (SIX:CSGN) as it identified material weaknesses in reporting controls.”
“It may have been a ‘technical’ issue according to the Swiss bank but in the current environment and given the company’s recent sketchy track record, investors were hardly in a forgiving mood.”
And Mould questioned whether the relative calm will survive the latest print of US inflation later.
“Given expectations have been ratcheted back for interest rate increases amid concern the current rate hiking cycle is starting to break things in the financial system, the markets, the Federal Reserve and politicians will be desperate to see an easing of inflationary pressures.”
“If inflation comes in ahead of expectations, volatility is likely to pick up once again as investors look ahead to the Fed’s meeting on 22 March.”
The FTSE 100 is currently at 7,524.73, down 23.90 points, or 0.32%. In Paris, the Cac 40 is up 1 point while the DAX is holding in the green, up 0.3%
ECB member sees no impact on Europe's banks from SVB
The collapse of Silicon Valley Bank is not expected to affect the euro zone’s banks, Greek central bank chief Yannis Stournaras has said.
Stournaras, a member of the ECB’s Governing Council, told Kathimerini newspaper: "We don’t see SVB (Silicon Valley Bank) having an impact on the euro zone’s banks or the Greek ones."
Stournaras knows all about financial dramas. Ten years ago he was Greece’s finance minister, when the eurozone debt crisis threatened to push Greece into bankrupcy.
Citi hikes Rolls-Royce price target
Away from the banks and one share doing rather nicely on Tuesday is Rolls-Royce Holdings PLC with shares up 2% at 148p.
The investment bank, Citi, has set a price target of 255p and suggested the results of the performance review, closing performance gaps and releasing working capital could add a further 65p upside.
After looking at the FTSE 100-listed engineer’s underlying cash flow and the upside potential from the CEO’s as yet unquantified turnaround plan Citi concluded Rolls-Royce offers continued strong investment performance.
Citi sees strong underlying cash flow improvement over the next five years, with over £1bn improvement coming from non-systemic elements dropping out and “wide body recovery turning the Civil Aerospace business and improving sentiment.”