(Alliance News) - Stocks in London were set to open lower on Wednesday, as concern about the US banking sector returned to centre stage after the share price collapse of First Republic Bank on Tuesday.
IG says futures indicate the FTSE 100 index of large-caps to open 20.73 points lower, or 0.3%, at 7,870.40 on Wednesday. The FTSE 100 index lost 21.07 points, or 0.4%, at 7,891.13 on Tuesday.
In New York on Tuesday, Wall Street ended sharply lower, with the Dow Jones Industrial Average down 1.0%, the S&P 500 down 1.6% and the Nasdaq Composite down 2.0%.
Worries around the banking sector came to the fore once more on Tuesday as shares in First Republic Bank collapsed by 49% after it revealed customers pulled out more than USD100 billion of deposits last month.
The California-based lender said withdrawals had stabilised this month, but added that deposits continued to fall slightly.
The news brought back nervousness about the sector, having calmed recently following the chaos caused by the collapse of Silicon Valley Bank.
Shares in Wells Fargo closed down 2.2%, Bank of America down 3.1% and JPMorgan Chase down 2.2%.
"Clearly, some investors feel the need to de-risk given the recent US market struggles and a plethora of risks, including high interest rates and low economic activity. It remains to be seen, however, with this will turn into a full-blown sell-off, or just another short-lived dip," said Fawad Razaqzad, market analyst at City Index and Forex.com.
The dollar softened slightly amid the sour sentiment about US banks. Sterling was quoted at USD1.2427 early Wednesday, higher than USD1.2404 at the London equities close on Tuesday.
The euro traded at USD1.0984, unchanged against USD1.0983 late Tuesday. Against the yen, the dollar was quoted at JPY133.62, lower versus JPY133.98.
In Tokyo on Wednesday, the Nikkei 225 stock index was down 0.7%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was up 1.0%. The S&P/ASX 200 in Sydney ended flat.
Gold was quoted at USD1,996.55 an ounce early Wednesday, higher than USD1,987.63 on Tuesday. Brent oil was trading at USD81.13 a barrel, higher than USD80.52 late Tuesday.
In Wednesday's corporate calendar, Glencore, Fresnillo and CRH will release trading statements, while GSK will release its first-quarter results.
By Heather Rydings, Alliance News senior economics reporter
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