FTSE 100 Buoyed by Commodity-linked Stocks Despite Bank of England’s Banking Sector Alert

Key Takeaways

• European stocks remain flat as Credit Suisse collapse weighs on investor confidence
• UBS sees Credit Suisse collapse as a growth opportunity and climbs 1.7%
• DAX rises by 0.4% following buyout deal for failed Silicon Valley Bank
• FTSE 100 boosted by commodity-linked stocks despite Bank of England’s caution over banking sector turmoil

Overview

On Tuesday, European stocks remained flat as investors continued to be cautious due to the recent collapse of Credit Suisse and concerns over a potential deeper crisis.

The STOXX 600 index closed flat, while the European banks index edged up 0.7% but was on track for its worst monthly showing since March 2020.

Real estate stocks slid 2.7%, and energy stocks jumped 1.9%.

UBS climbed 1.7% after its CEO said the bank saw its government-orchestrated takeover of Credit Suisse as a growth opportunity.

Germany’s Aroundtown slumped 10.2%, and Embracer tumbled 13.4%.

DAX Rises on Buyout Deal for Failed Silicon Valley Bank

The DAX opened higher on Tuesday, as concerns about the banking sector eased after a buyout deal for the failed Silicon Valley Bank.

The benchmark DAX rose by 0.4% to 15,184 points, following a 1.1% increase on Monday.

Commerzbank shares rose by 1.4%, while Deutsche Bank shares fell by 0.9% due to recent volatility.

Drug discovery company Evotec reported a 22% rise in preliminary revenues, leading to a 0.6% increase in its share price.

Meanwhile, commercial kitchen supplier Rational AG saw a significant increase in fiscal year 2022 revenue but still experienced a 3.5% drop in its share price.

Construction equipment manufacturer Wacker Neuson also rose by around 1% after forecasting high demand in 2023.

FTSE 100 Up on Commodity-linked Stocks Despite Bank of England Caution

The FTSE 100 index in Britain closed higher on Tuesday, boosted by commodity-related stocks, but came off its session high due to caution following the Bank of England’s announcement that it was on alert after the recent turmoil in the banking sector.

The blue-chip index closed 0.2% higher, with BP shares rising 2.4% after the oil firm and Abu Dhabi National Oil Co made an offer to jointly acquire 50% of Israeli offshore natural gas producer NewMed Energy for about $2 billion.

The energy and mining sectors also experienced gains due to higher oil and metal prices.

However, the mid-cap FTSE 250 index fell 0.7%, with Synthomer losing 10.9% after reporting that its annual profits were impacted by subdued demand.

Short-Term Outlook

The short-term outlook for European stocks, especially the DAX and FTSE, remains cautious due to the recent collapse of Credit Suisse and concerns over a potential deeper crisis in the banking sector.

However, the DAX rose by 0.4% following a buyout deal for the failed Silicon Valley Bank, which eased some concerns. Meanwhile, the FTSE 100 index in Britain closed 0.2% higher, boosted by commodity-related stocks, but came off its session high due to caution following the Bank of England’s announcement.

Energy and mining sectors may experience gains due to higher oil and metal prices. Overall, investors should remain vigilant and monitor the developments in the banking sector closely.