FTSE 100 lower as HSBC sinks but signs the market is stabilising ahead of US inflation figures

“The FTSE 100 may have been dragged lower by index heavyweights on Tuesday morning, but there was a sense some calm had been restored to markets after a bruising few sessions,” says AJ Bell Investment Director Russ Mould.

“While the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector isn’t helped by the latest revelations from Credit Suisse as it identified material weaknesses in reporting controls.

“It may have been a ‘technical’ issue according to the Swiss bank but in the current environment and given the company’s recent sketchy track record, investors were hardly in a forgiving mood.

“Asian markets played catch up with the market chaos overnight, with the weakness hitting HSBC, but Wall Street saw fairly stable trading last night. Whether the relative calm will survive the latest print of US inflation later is an open question.

“Given expectations have been ratcheted back for interest rate increases amid concern the current rate hiking cycle is starting to break things in the financial system, the markets, the Federal Reserve and politicians will be desperate to see an easing of inflationary pressures.

“If inflation comes in ahead of expectations, volatility is likely to pick up once again as investors look ahead to the Fed’s meeting on 22 March. In advance of tomorrow’s UK Budget, Centrica gave a boost to the country’s energy security by developing a plan to extend the life of two of its nuclear power stations.

“UK jobs figures suggested the labour market is becoming less tight as wage growth slows – helping to provide cover for the Bank of England to pause for breath on rates when it meets next week.”

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