First Republic Bank’s latest results have restarted the market’s worry engine, triggering a sell-off across Europe. Its shares fell 22% in after-hours trading after revealing a sharp decline in deposits, prompting speculation it could be the next bank to be taken over.
There are already concerns that banks in many parts of the world will choose to be more selective over whom they lend to, which in turn could have negative implications for the economy.
Russ Mould, investment director at AJ Bell, says: “Investors certainly lost their appetite for banking stocks, with NatWest falling 2.2%, Lloyds down 1.8% and Barclays slipping 1.2%. Together with weakness in economically sensitive mining and packaging sectors, the FTSE 100 fell 0.5% to 7,875.
“Whitbread was one of only 11 stocks in the FTSE 100 in positive territory, rising nearly 4% after its results showed a strong recovery in trading for Premier Inn and news of a £300 million share buyback.
“Concerns about the slowdown in the housing market have weighed on shares in builders’ merchants for some time, and Travis Perkins’ latest trading update does nothing to change market sentiment.
“Weakness across the new build housing and domestic repair, maintenance and improvement markets is problematic for the group, meaning it has become more reliant on the commercial, industrial and public sector markets for business.”