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FTSE dips as global banking stocks tumble after Silicon Valley Bank collapse

The FTSE 100 slipped on Tuesday morning after a 2.58% slide on Monday (Matt Crossick/PA)
Henry Saker-Clark, PA Deputy Business Editor

The FTSE 100 slipped on Tuesday morning as banking shares continued their fall amid the continued shockwaves from the collapse of Silicon Valley Bank.

London's top index of blue-chip firms moved 0.4% lower to 7,515 points as it reached its lowest since January 3.

It came on top of a 2.58% slide on Monday, as more than £50 billion was wiped off the value of the stock exchange over the course of the day.

Banking giants HSBC and Standard Chartered were among the largest fallers during the start of trading on Tuesday.

Global financial markets had continued their slump earlier in the session, as Asia was rocked again by worries in the financial sector.

Efforts by US President Joe Biden late on Monday and other policymakers did little to turn sentiment around for cautious investors.

He said: “Americans can have confidence that the banking system is safe. Your deposits will be there when you need them.”

Nevertheless, he promised to look at new banking regulations to make it less likely that such a large bank failure can happen again.

Banking shares in Asia – where the first global markets open – continued their decline on the opening bell on Tuesday, with a particularly poor start for Japanese firms.

The Nikkei 225 in Tokyo fell 2.2%, while the S&P/ASX 200 closed 1.4% down, representing a third consecutive day of decline.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: “Monday was yet another ugly day for bank stocks around the world, as the selling pressure continued following the SVB debacle in the US last week.”

The analyst added that attention will now turn towards Tuesday's US consumer price index (CPI) inflation reading, amid worries that the banking turbulence could alter the path for interest rates.

“There is now a massive lack of consensus in the market regarding what the Fed should do, and what the Fed will do,” she said.

“Some think that, if today's inflation data is not sufficiently soft, the Fed should continue hiking by 50bp (basis points).”

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