Investors back safe haven assets amid SVB collapse
INVESTORS made a rush for safe-haven assets amid the turmoil across the banking world.
Shares in gold producers were in rich demand as stocks across the Footsie took a battering from the fallout surrounding Silicon Valley Bank (SVB).
Among those to weather the storm included Endeavour Mining, which advanced 4.2pc, or 70p, to 1720p, Mexican miner Fresnillo gained 3.5pc, or 25.2p, to 747.4p, Centamin rose 5.3pc, or 5.35p, to 107.25p and Pan African Resources surged 9.9pc, or 1.3p, to 14.42p.
Away from gold, there were also gains for water provider United Utilities (up 1.3pc, or 13p, to 1044.5p), consumer goods group Reckitt Benckiser (up 0.2pc, or 10p, to 5760p) and energy firm National Grid (up 1.3pc, or 14p, to 1064p). It painted a stark contrast to the sell-off that dragged down London-listed lenders.
In a dismal start to the week, the FTSE 100 dropped 2.6pc, or 199.72 points, to 7548.63 and the FTSE 250 fell 2.8pc, or 532.38 points, to 18825.08. London’s bluechip index slumped to a twomonth low while a sea of red swept over global stock markets.
In Europe, the main benchmark in Germany was off by 3pc and France’s Cac slid 2.9pc. But Wall Street bucked the trend, with the Dow Jones Industrial Average rising 0.08pc, the S&P 500 gaining 0.2pc and the Nasdaq up 0.8pc.
AJ Bell investment director Russ Mould said: ‘There’s plenty to worry about whether it be the conflict in Ukraine, inflation, rising interest rates, and now a potential banking crisis has been added to the mix. Little surprise people are feeling a bit spooked.’
Back in London, Direct Line swung to a loss as the insurer blamed surging inflation for driving up the cost of motor repairs.
It made a loss of £45.1m for 2022 having made a £446m profit the year before. Gross written premiums slid 3.2pc to £2.97bn last year.
Like others across the sector, Direct Line also took a hit from bad weather claims. It paid out £149m of weather-related claims last year – its highest payout since the group floated in 2012 – and way above its £73m budget. December’s freeze resulted in around £95m of claims alone. The group reiterated its final dividend for 2022 will be axed. Shares tumbled 4.8pc, or 8.1p, to 159.55p.
Housebuilders also faced an important decision following the deadline to sign up to the Government’s contract to repair unsafe buildings which they developed.
Barratt Developments, Bellway, Crest Nicholson, Redrow, Persimmon, Taylor Wimpey and Vistry yesterday all said they will set aside funds to cover the costs of removing dangerous cladding. The Government has warned there will be ‘significant consequences’ for housebuilders which refuse to sign up or follow the terms set.
Bellway has set aside £513.7m, Barratt has pencilled in £427.2m, Persimmon thinks it will need to spend £350m and Taylor Wimpey gave a slightly lower figure of £245m. Shares in Barratt Developments slipped 1.7pc, or 7.4p, to 430.7p, Bellway fell 2.6pc, or 54p, to 2045p, Crest Nicholson slumped 1.7pc, or 3.8p, to 223.2p, Redrow dropped 2.8pc, or 13.2p, to 457.4p, Taylor Wimpey lost 1.2pc, or 1.35p, to 114.45p, Persimmon sank 1.3pc, or 15.5p, to 1222.5p and Vistry slid 2.6pc, or 20p, to 757.5p.
British American Tobacco traded lower after JP Morgan cut the cigarette maker’s rating to ‘neutral’ from ‘overweight’ and slashed the target price to 3100p from 3600p. Shares fell 3.2pc, or 100p, to 3013.5p.
There was better news for cruise giant Carnival after P&O Cruises enjoyed its best-ever wave period with record bookings made between December 15 last year through to March 6. But shares fell 7.7pc, or 57.2p, to 687.2p.