Market Report: Deutsche gives nod to embattled banks

Britain's banks have had a torrid time of late – and deservedly so. Money-laundering, mis-selling and excessive bonuses are just some of the issues that have eroded investor confidence in a sector, that has been up against the wall since 2007.

Analysts at Deutsche Bank reckon it's time to put these issues aside and pile back into the industry, with HSBC and Standard Chartered among their top tips.

The broker was particularly bullish on HSBC, forecasting a recovery in its US business and raising its rating from Hold to Buy.

"We expect HSBC's underlying earnings to be driven by the recovery in the US and an improving outlook in Asia," it said in a note. "Putting aside the risk of the US fiscal cliff, data out of the US point to an improving US housing market – a source of pain for HSBC's run-off mortgage portfolio of $44bn which has taken cumulative losses of 30 per cent so far. Though the speed of housing recovery is modest, we expect HSBC to show better progress in this non-core book through customer deleveraging and asset sales."

Shares in HSBC were up for most of the day before ending down 0.4p at 643.4p. Standard Chartered rose 9p to £15.01.

Overall, the London markets slipped into negative territory, dampening hopes of a Santa Rally – a festive phenomenon where stock markets rise in the lead-up to Christmas.

The FTSE 100 index fell 16.24 points to 5929.61 while the wider FTSE 250 dipped 12.74 points to 12,211.57 as investors digested the latest round of monetary stimulus in the US.

The FTSE rebounded from its lows but spent the whole day in the red as fears grew about the looming fiscal cliff. Without a resolution soon, the usual Christmas rally could come to a very quick and abrupt end as investors prepare themselves for the worst.

"The automatic budget cuts and tax increases in the US that are due come into force in the New Year could have a crippling effect on the world's largest economy and as such the global economy too which is why investors remain cautious."

Gold miner Centamin slid to a seven-month low today as its quest for Egyptian riches hit the proverbial brick wall. Investors abandoned the company in their droves after it suspended operations at its flagship Sukari mine in the country because of a dispute over diesel.

The company said it had received an "illegal" $65m (£40m) claim from state-owned Egyptian General Petroleum Corporation (EGPC) for fuel supplied between December 2009 and January 2012.

EGPC has said it would not supply Centamin with any fuel until the money is paid. The miner said its fuel supplies are at critical levels.

"It is with regret that, due to a resultant lack of diesel and a shortfall in working capital in Egypt for the local operations the decision has been taken to suspend operations at Sukari and to place the mine on care and maintenance until these issues are satisfactorily resolved," the company said.

Shares in Centamin tumbled 25p – or 47 per cent – to 27.7p, their lowest level since late 2005.

Engineer John Wood Group was one of the day's big losers, retreating 35p to 733.5p despite an upbeat trading update in which it said it full-year performance was likely to be in line with expectations.

AstraZeneca fell 84p to 2958p as the pharmaceuticals group was hit by a testing setback.

The company's rheumatoid arthritis drug proved to be less effective than one from rival Abbott Laboratories in a study, spooking investors.

Elsewhere, Tui Travel retreated 3.6p to 282.5p after it was confirmed the company would be promoted to the FTSE 100 in a reshuffle later this month, replacing utilities group Pennon.

Tui's promotion comes on the back of an 80 per cent share-price rally since the middle of the year. The group posted a 40 per cent increase in pre-tax profits last year as British holidaymakers ditched the staycation in favour of overseas holidays.

Direct Line Group, the motor insurer spun off from Royal Bank of Scotland, in October will join the FTSE 250 index in the Christmas Eve shake-up alongside pubs group Enterprise Inns and United Drug.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links