BoE Move Lifts Financial Stocks

123jump.com Staff
11 Mar, 2008
New York City

The Bank of England in a coordinated move along with central banks in Europe, Canada, and Australia offered to inject liquidity and accept wider collateral. Markets in Europe, Canada, and U.S. rallied. In London trading FTSE 100 stocks rose 1.09% or 61.3 to 5,690.40. Of the FTSE 100 stocks 67 rose, 33 declined and 2 were unchanged. Cairn Energy led advancers in the FTSE 100 index shares with a rise of 8.06% followed by Standard Life adding 5.42%.

[R]2:30PM New York, 6:30PM London – the Bank of England in a coordinated move along with central banks in Europe, Canada, and Australia offered to inject liquidity and accept wider collateral. Markets in Europe, Canada, and U.S. rallied.[/R]

London stock averages rose after the G-10 central banks made a coordinated move to add liquidity and stem the rising interest rate in the money market.

Market Sentiment

In London trading FTSE 100 stocks rose 1.09% or 61.3 to 5,690.40.

Of the FTSE 100 stocks 67 rose, 33 declined and 2 were unchanged. Cairn Energy led advancers in the FTSE 100 index shares with a rise of 8.06% followed by Standard Life adding 5.42%.

Central Banks Ally to Calm credit markets

The world’s largest banks- the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank - collaborated to inject liquidity into money markets in North America and Europe to ease the rise in money market interest rates.

In particular, the Bank of England announced it will extend its 3-month long-term repo open market operation and offer £10 billion to the market for three months on March 18. The BoE will accept wider list of collateral it accepted in December and January. The bank also added that it will conduct a similar operation in April.

Similarly, U.S. Federal Reserve authorities offered to double funding available for short term to $200 billion.

The Federal Reserve added that it will increase the currency swap arrangements with ECB by $10 billion to $30 billion and the Swiss National Bank by $2 billion to $6 billion.

U.K. housing market falls the most since 1990

The Royal Institute of Chartered Surveyors reported today in the UK Housing Market Survey published on its web site that Chartered Surveyors reporting housing price declines increased 54.7% from January to 64.1%. RICS reported that the decline is close to the historical low of June 1990 when 64.5% more Chartered Surveyors reported a fall in house prices.

The net balance of surveyors reporting price rises rose from 7% to 25% as Scotland home prices increased.

New buyer enquiries continued to fall after 37% more Chartered Surveyors reported a fall than a rise in new buyer enquiries, down from 35% in January.

It is believed that the current average level of unsold property per surveyor increased to 92, the most since October 1998 when the average figure per surveyor was 93.

In addition, completed sales compared to the stock of unsold property on the market fell from 28.7% to 26.5%.

Gainers & Losers

Cairn Energy led advancers in the FTSE 100 index shares with a rise of 8.06% followed by increases in Standard Life of 5.42%, in Barclays Plc in 5.11%, in HBOS Plc of 4.89%, and in G4S Plc of 4.65%.

Other financial stocks also gained as well. The Royal Bank of Scotland rose 4.47%, Standard Chartered advanced 3.04% and Lloyds TSB Group increased 2.91%.

G4S increased after the G4S reported today that full-year 2007 profit increased 53% from 2006 to £147.2 million on sales rise of 11%.

Yell Group Plc led decliners in the FTSE 100 index shares with a drop of 4.28% followed by losses in Xstrata Plc of 2.40%, in Amec Plc of 2.17%, in British Sky Broadcasting of 2.16%, and in Rentokil International of 1.97%.

International Markets

In Tokyo Nikkei 225 Index closed higher 126.15 or 1.01% to 12,658.28, in Hong Kong Hang Seng index increased 290.30 or 1.28% closed to 22,995.35. Australia ASX 200 index decreased 46.20 or 0.89% to close 5,134.20. In Malaysia KL Composite index increased 33.32 or 2.84% closed to 1206.54.

In South Korea Kospi Index increased 16.31 or 1.00% to close at 1,641.48, in Thailand SET index closed higher 13.18 or 1.63% to 819.83 and Indonesia JSE Index edged decreased 4.33 or 0.17% to 2,523.53. Sensex index in India increased 199.43 or 1.25% to 16,123.15.

In London FTSE 100 Index closed higher 61.30 or 1.09% to 5,690.40, in Paris CAC 40 index increased 60.70 or 1.33% to close at 4,627.69 and in Frankfurt DAX index higher 76.49 or 1.19% to close at 6,524.57. In Zurich trading SMI increased 88.00 or 1.25% to close at 7,143.01.