MARKET REPORT: Brokers stick boot into Lloyds because it sinks 3.2%

With global markets crashing on fears over a possible US recession, banks were hit hard.

Lloyds lost 1.4 per cent, or 0.78p, to 54.56p, with its falls exacerbated by negative broker comment.

Analysts at US giant Citi downgraded their stance on Lloyds to neutral, noting that it was the only bank to miss forecasts on pre-provision profit.

The analysts also felt exposure to redress for motor finance mis-selling looks set to remain an overhang until May.

In contrast, NatWest was the stand-out performer in the second quarter, and they believe its enhanced full-year revenue guidance can still be surpassed. NatWest has replaced Barclays as Citi’s top domestic banking pick.

Sell-off: Lloyds lost 1.3% or 0.74p, to 54.6p, with its falls exacerbated by negative broker comment.

NatWest failed to benefit from that accolade, shedding 1 per cent, or 3.2p, to 322.4p, while Barclays dropped 1.4 per cent, or 2.9p, to 206.2p. 

After Friday’s sharp falls, the FTSE 100 closed down another 2 per cent, or 166.48 points, at 8008.23, while the FTSE 250 plunged 2.8 per cent, or 589.61 points, to 20,236.74.

Leading the sell-off were investment firms with heavy exposure to the US, Asia, and tech stocks.

FTSE 100-listed Pershing Square Holdings was down 3 per cent, or 106p. at 3482p, while Scottish Mortgage Investment Trust lost 5.6 per cent, or 45.2p, to 768p.

In the FTSE 250, Schroder Oriental Income Fund shed 5.3 per cent, or 14.5p, to 257.50p, and Polar Capital Technology Trust dropped 2.7 per cent, or 80p, to 2840p.

There were only a handful of gainers across the FTSE 350, with discount airline Wizz Air sneaking up 0.1 per cent, or 1p, to 1449p, having been a big faller last week.

Meanwhile consumer products firms Haleon – ahead 0.4 per cent, or 1.4p, to 369.2p – was wanted for its defensive attractions. 

Stock Watch – UK Oil & Gas 

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But utilities, normally seen as defensive, failed to find any support, blighted by negative broker comment.

Severn Trent shed 5.8 per cent, or 54p, at 499p, United Utilities lost 5.3 per cent, or 56p, to 1003p, and Pennon was down by 5 per cent, or 31.5p, to 599p as analysts at Barclays cut their ratings.

A broker downgrade, as well as the global investment sell-off, also weighed on life and pensions firm Prudential, which shed 1.2 per cent, or 7.8p, to 637.6p. 

Analysts at Deutsche Bank expect limited, if not negative growth, across many of the Pru’s key business lines.

Fund platform Hargreaves Lansdown lost 4.4 per cent, or 48.5p, at 1051.5p as the deadline was extended a third time for a group of private equity bidders to make a firm £5.4billion takeover offer.

The company reports full-year results on Friday, hours before a ‘put up or shut up’ deadline, which will expire at 5pm.

Clarkson sank 14.7 per cent, or 640p, to 3730p after a weaker first half performance, with its profit falling 4 per cent. But as its order book is weighted toward the coming six months, the shipping firm raised its interim dividend by 6.7 per cent.

Aerospace engineer Senior boosted its interim dividend after a 10 per cent rise in first-half profit as contracts with Airbus offset production issues with the Boeing 737 Max. 

However, it lost 6.5 per cent, or 10.2p, to 147.4p.