FTSE 100 watch: Footsie slips as Fed stress test hits banks

on Mar 27, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Thursday, March 27: Britain’s blue-chip index has declined today, retreating from a two-day high, with some London-listed banks failing a US Federal Reserve stress test. Ukraine concerns have again returned to the market, further dampening investor sentiment.

Shares in Babcock International (LON:BAB) have taken a hit after the company announced that it had agreed to acquire a helicopter services company via a £1.1 billion rights issue.
**London-listed banks pressure Footsie**
As of 12:23 UTC, the FTSE 100 index had shed 32.33 points to be 0.49 percent lower at 6,572.97 after having advanced in the previous two sessions. Both Royal Bank of Scotland Group Plc (LON:RBS) and HSBC Holdings Plc (LON:HSBA) have lost ground today after their US units were among the banks which the Fed blocked from paying higher dividends or buying back shares, citing weaknesses in their capital planning.

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Shares in RBS have dropped 1.49 percent to 301.55p so far today, while HSBC’s share price is currently 0.65 percent down at 607.20p.
“It’s a watching brief for UK banks this morning, but with any further downside they’re likely to attract buyers,” Matt Basi, head of sales trading at CMC Markets, told Reuters.
Tensions between Moscow and the West have also weighed on the market today, after the US and the EU agreed to work together to prepare tougher potential sanctions against the Russian Federation.

Charles Stanley analyst Bill McNamara told Reuters that he felt that investors “had become very news-sensitive and it is not the possibility of an escalation in the Ukraine/Crimea conflict that is worrying them most, but the possibility that deep sanctions could derail the global economic recovery”.
**Acquisition concerns hit Babcock**

Babcock has been one of the top FTSE 100 fallers today after agreeing to acquire helicopter services provider Avincis in a deal which would see the engineering group pay £920 million via a £1.1 billion cash call and take on £705 million of debt. (Babcock share price: Group buys helicopter company)

Mike Allen at Panmure Gordon told the Guardian that the implied valuation of the business was “not particularly cheap and there is an ongoing investigation related to the Glasgow helicopter crash with the full financial liability/reputational impact unknown”.
Babcock’s share price has shed six percent to 1,284.00p.
Shares in Tullow Oil (LON:TLW) have also declined after the Africa-focused explorer unveiled downbeat drilling results from Kenya. As of 12:41 UTC, Tullow Oil’s share price had slipped 3.10 percent to 752.94p.
**The FTSE 100 was 0.57 percent down at 6,567.53 points as of 13:00 UTC on March 27, 2014.**


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