London Market: Banks face dismay over bailout
Sunday 27 September 1998
Bonds are seen rising on expectations the US Federal Reserve will cut interest rates, prompting the Bank of England to follow suit.
"The focus will be on the Fed with the expectations for a cut, and that will firm up hopes for a cut in the UK in October," said Steve Andrew, a fixed income analyst at Merrill Lynch.
The FT-SE 100 index see-sawed last week to end 5.4 points higher at 5061.0, with losses in the last two sessions wiping out early gains as Barclays slumped 10 per cent. The FT-SE paper sub-index fell most; the integrated oil index rose most.
"None of the stories have been good for banks," said Tim Gregory, at Gartmore Capital Management. "There'll probably be diabolical weekend press comments and rumours, whether they're unfounded or not."
Barclays, as well as other retail banks, fell most among the financial stocks. The stock has almost halved in value since July. Barclays said its bail-out to Long-Term Capital won't result in a "negative impact on its profit and loss account", unlike European bank UBS, which slumped 19 per cent in two days after it said it will suffer losses of $720m.
Even so, Halifax and other mortgage lenders could extend this week's gains. They aren't exposed to much foreign debt and custom could be boosted if the Bank of England tempts more home-buyers to the market by cutting interest rates before the year-end.
On Friday, the benchmark 9 per cent 10-year UK government bond yield fell 4 basis points to 5.02 per cent. That's 11 basis points higher than the record low of 4.91 per cent it reached earlier in the week, though still down over 45 basis points from a month ago. "If the Fed cut, the Bank of England would be happy to follow," said Gregor Macintosh, at Edinburgh Fund Managers. "The short-end is on fire."
Among shorter-maturity gilts - those most responsive to changes in expectations for official interest rates - the yield on the 8 per cent gilt due 2000 fell 8 basis points to 5.71 per cent.
The Bank of England's Monetary Policy Committee next meets to set rates on 7 and 8 October.
- 1 Woman 'suffocates newborn baby in plastic bag and puts it in her desk minutes after giving birth'
- 2 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
- 5 Chinese student carries disabled friend to school every day for three years
Nepal earthquake in pictures: Photos show devastation caused by 7.8 magnitude earthquake
Royal baby: Live updates as superbug closes ward at St Mary's Hospital in London where Duchess of Cambridge is due to give birth
Nepal earthquake: Rescuers forced to dig with their bare hands in search for survivors as images show damage to historic buildings
Ed Miliband and Boris Johnson in angry clash live on BBC's Andrew Marr Show
Bali Nine executions: British grandmother on death row in Indonesia Lindsay Sandiford says she 'just wants to get it over with'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...