MARKET REPORT: ‘Milder’ recession puts banks on firmer footing

Banking stocks made gains as analysts said the sector was more than capable of weathering what will likely be a shallow recession.

In a note to clients, Citi painted a more upbeat picture of the outlook for the UK economy and the country’s biggest lenders.

‘Lower gas prices, additional fiscal stimulus and lower market rates have all provided much needed support to the UK economy, where any recession is now likely to be shorter and milder,’ the Citi report said. 

‘UK banks also enter this recession with healthy balance sheets, excess capital and improving profitability.’

It marked something of a U-turn for Citi, which published a report last summer suggesting inflation would hit 18 per cent in the UK early this year.

Shares in Lloyds rose 1.2 per cent, or 0.62p, to 53.45p, NatWest gained 1.3 per cent, or 3.8p, to 304p, Barclays climbed 1.2 per cent, or 2.3p, to 188.84p, HSBC added 1.5 per cent, or 9p, to 605p and Standard Chartered increased 1.7 per cent, or 11.2p, to 682.6p.

The FTSE 100 rose 0.36 per cent, or 28 points, to 7864.71 but the FTSE 250 slid 1.08 per cent, or 220.38 points, to 20189. 

Morgan Advanced Materials warned its annual profit would be lower than hoped following a recent cyber attack.

The FTSE 250 firm, which makes ceramics for metal smelting factories, estimated that it could cost up to £12million to resolve the issue.

As a result, Morgan Advanced Materials estimated that its profit for 2023 could be around 10 per cent to 15 per cent below previous expectations.

Stock Watch – Zinc Media Group

Shares in Zinc Media soared after a bumper update from the firm behind the BBC series Putin vs The West.

The production company expects its revenue and profit for 2022 to have come in ahead of market forecasts.

And it has already secured £15million of revenue for 2023, up from £9million a year earlier.

‘This is the strongest start to a financial year during my time at Zinc,’ said chief executive Mark Browning.

Shares surged 16.8 per cent, or 14p, to 97.5p.

It added that it ‘does not expect the incident to have a material long term impact’.

But the group, which expected to publish its results for 2022 on February 28, will now aim to do so by the end of April. Shares fell 4.9 per cent, or 15.5p, to 300.5p.

The update came only a day after fellow mid-cap firm Vesuvius (down 2.2 per cent, or 8.8p, to 396.2p) suffered a cyber attack.

Auction Technology was on the rise after it bought a US estate sales listing site.

The FTSE 250 business, which operates as a marketplace connecting bidders with auction houses to buy items such as antiques, sofas and paintings, snapped up the Missouri-based ESN for £33million. Shares soared 9.5 per cent, or 65p, to 748p.

Heading in the other direction was Ukraine-focused Ferrexpo. The miner, which produces and exports iron ore pellets, sank 9.8 per cent, or 15p, to 137.5p after a Ukrainian court passed an order to freeze the bank accounts of one of its subsidiaries.

It is part of an investigation into potential underpayment of iron ore royalties by Ferrexpo Poltava Mining between 2018 and 2021.

Ferrexpo said it rejected all accusations and will appeal the court’s decision. There was a mini boardroom reshuffle at Victorian Plumbing. 

The bathroom retailer appointed Daniel Barton, the group director of finance, as its chief financial officer after Paul Meehan said he wishes to step down from the role to take up other opportunities.

Barton, who joined Victorian Plumbing last August, will start his new job on April 1.

Shares inched up 0.3 per cent, or 0.3p, to 92.5p.

Luxury wallpaper and textiles business Sanderson Design Group saw shares drop after its European business was impacted by its exit from Russia.

The group, which has showrooms in London, New York, Chicago, Amsterdam and Dubai, said overall sales were flat at £112million over the year to January 31.

Sanderson hailed 18 per cent growth in North America, but these gains were offset by a slump in northern Europe after ending trade in Russia, where it had previously recorded £1.8million in sales. Shares dropped 7.6 per cent, or 10p, to 121.5p.