MARKET REPORT: Investors back safe haven assets amid SVB turmoil

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 4.2 per cent, or 70p, to 1720p, Mexican miner Fresnillo gained 3.5 per cent, or 25.2p, to 747.4p, Centamin rose 5.3 per cent, or 5.35p, to 107.25p and Pan African Resources surged 9.9 per cent, or 1.3p, to 14.42p.

Collapse: Shares in gold producers were in rich demand as stocks across the Footsie took a battering from the fallout surrounding Silicon Valley Bank 

Away from gold, there were also gains for water provider United Utilities (up 1.3 per cent, or 13p, to 1044.5p), consumer goods group Reckitt Benckiser (up 0.2 per cent, or 10p, to 5760p) and energy firm National Grid (up 1.3 per cent, 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 2.6 per cent, or 199.72 points, to 7548.63 and the FTSE 250 fell 2.8 per cent, or 532.38 points, to 18825.08. London’s blue-chip index slumped to a two-month low while a sea of red swept over global stock markets.

In Europe, the main benchmark in Germany was off by 3 per cent and France’s Cac slid 2.9 per cent. 

But Wall Street bucked the trend, with the Dow Jones Industrial Average rising 0.08 per cent, the S&P 500 gaining 0.2 per cent and the Nasdaq up 0.8 per cent.

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 £45.1million for 2022 having made a £446million profit the year before. Gross written premiums slid 3.2 per cent to £2.97billion last year.

Stock Watch – Nightcap

Nightcap remained in good spirits after it cashed in on young revellers enjoying nights out despite a wave of train strikes.

A bumper festive period helped revenue at the bar owner surge 48.7 per cent to £23.5million in the six months to January 1.

This came even as train strikes – mostly on Thursdays and Saturdays – affected the most important weekly trading days. 

It hit sales, which slid 5.8 per cent compared to the same period a year earlier.

Shares were flat at 11p.

Like others across the sector, Direct Line also took a hit from bad weather claims. It paid out £149million of weather-related claims last year – its highest payout since the group floated in 2012 – and way above its £73million budget. 

December’s freeze resulted in around £95million of claims alone. The group reiterated its final dividend for 2022 will be axed. Shares tumbled 4.8 per cent, 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 £513.7million, Barratt has pencilled in £427.2million, Persimmon thinks it will need to spend £350million and Taylor Wimpey gave a slightly lower figure of £245million. 

Shares in Barratt Developments slipped 1.7 per cent, or 7.4p, to 430.7p, Bellway fell 2.6 per cent, or 54p, to 2045p, Crest Nicholson slumped 1.7 per cent, or 3.8p, to 223.2p, Redrow dropped 2.8 per cent, or 13.2p, to 457.4p, Taylor Wimpey lost 1.2 per cent, or 1.35p, to 114.45p, Persimmon sank 1.3 per cent, or 15.5p, to 1222.5p and Vistry slid 2.6 per cent, 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 3.2 per cent, 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 7.7 per cent, or 57.2p, to 687.2p.