FTSE 100 stays strong as banks rally, US stocks advance; UK energy prices to fall

© Reuters. FTSE 100 stays strong as banks rally, US stocks advance; UK energy prices to fall

Proactive Investors -

• FTSE 100 stays below session peak of 7,557.55
• Wall Street higher awaiting Wednesday's Fed rate decision
• Banks rally as US Treasury Secretary says US sector is "stabilsing"

Good news energy

Energy bills will fall below £2,000 from July, Investec analysts have predicted, as wholesale gas prices in Europe continue to fall.

The analysts expect Ofgem’s price cap, which determines how much suppliers can charge per unit of energy, will fall to £1,981 from July and then to £1,966 in October for the average household on an annual basis. This is a fifth lower than Investec's previous forecast for July, where it estimated Ofgem would set the cap at £2,478.

Ofgem’s lower cap will largely come as the result of falling gas prices, which sat at 96p per British thermal unit on Tuesday, down from an August peak of 640p, though network, policy and supplier operating costs also play a part.

Investec analyst Martin Young said the cheaper price cap, forecast to reach its lowest level since April 2022, was welcome but was still far higher than households are used to paying.

He added people may be tempted to switch to fixed rates to avoid volatile markets hiking bills again this winter, but also suggested he expected more “innovative tariffs” to be launched.

“We need to be cognisant of the fact that when any annual estimate starts with a two, that’s still much higher than typical households are used to paying,” Young said. “Some people will just want a fix for that piece of mind.”

Wall Street well-bid

The FTSE 100 held close to strong session highs in afternoon trading as US stocks started the day in positive fashion as banking stocks rallied after fears over the crisis caused by the recent collapses of Silicon Valley Bank and Signature Bank and the rescue of Credit Suisse (SIX:CSGN) dissipated, with the focus switching to the US Federal Reserve's latest two-day monetary policy meeting starting today.

Around 45 minutes after the New York open, the Dow Jones Industrials Average was up 0.8%, or 249 points at 32,492, while the broader S&P 500 gained 0.9%, and the tech-laden Nasdaq Composite rose 1.0%.

US regional banks were lifted by comments from Treasury Secretary Janet Yellen Tuesday morning, suggesting that the government is would provide further guarantees of deposits if the banking crisis worsens. First Republic Bank shares gained about 33% to $16.18.

"Stock markets are bouncing back on Tuesday as some calm returns following the UBS takeover of Credit Suisse and traders look ahead to the Fed tomorrow," said Craig Erlam, senior market Analyst UK & EMEA at OANDA. "It's been a wild couple of weeks and while I, along with everyone else, am hopeful that the worst is behind us, I can't say I'm particularly confident. The response to recent events has been impressive from central banks, regulators, and governments, and while we can commend them for their firefighting skills, only time will tell if they've been successful in extinguishing the flames."

In London, around 2.15pm, the FTSE 100 index was 130 points, or 1.7% stronger at 7,532.

Some of the top risers and fallers

Manx Financial Group PLC shares surged back toward their all-time high on 28.6p after the company reported a 70% increase in profits for the past year.

The owner of Conister Bank and an assortment of lending, leasing, broking and financial advice firms said its financial performance represented a record year, despite the economic backdrop.

Shares in UK and Australia-listed MGC Pharmaceuticals Ltd jumped 25% in London after a positive session down under – which at one point saw the stock soar 57%.

The catalyst was the listing by the US Food & Drug Administration of its Covid treatment ArtemiC as an over-the-counter drug.

United Oil & Gas PLC shares jumped as much as 10% after reporting the start of production from the ASH-8 development well at the Abu Sennan licence onshore Egypt.

Luceco PLC saw its shares fall almost 9% after the wiring accessories and EV chargers group reported revenues down by 20% and profits flopped by almost a third.

Although analysts at Liberum, the corporate broker, pointed out that the numbers were actually at the top end of guided expectations as it raised its price target to 155p and repeated its ‘buy’ recommendation.

Shares in Pressure Technologies PLC fell 7% to 38.65p on Tuesday morning after a review of accounting policies led to the company forecasting a wider loss for the financial year 2022.

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