UK Shares Rebound as Bond Market Eases, Metro Bank Shares Plummet
UK shares bounced back on Thursday, ending a three-day losing streak, as global equities breathed a sigh of relief following a recent downturn in the bond market. The benchmark FTSE 100 index rose by 0.2% by 0717 GMT, while the domestically focused FTSE 250 index opened 0.4% higher, recovering from a near one-year low reached in the previous session.
Investors found some respite as the benchmark U.S. 10-year bond yield retreated from 16-year highs and the U.S. dollar softened, alleviating anxiety in the market. The calming of nerves came after a turbulent period for global equities, triggered by fears of rising inflation and higher interest rates.
However, while the overall market showed signs of recovery, shares of Metro Bank, a British mid-sized lender, took a hit. Metro Bank’s shares slumped by 26.7% following reports of an urgent capital raise to strengthen its balance sheet. Press reports suggested that the bank was in talks to raise as much as £600 million ($728.52 million).
Sources familiar with the situation confirmed that Metro Bank was exploring options to bolster its balance sheet. The bank has faced increased scrutiny after it disclosed last month that it had incorrectly classified a large number of commercial loans, which resulted in a sharp drop in its share price and a loss of investor confidence.
Meanwhile, Imperial Brands, the cigarette maker, saw a 1.4% gain in its shares after announcing a $1.34 billion share buyback program. The company also reaffirmed its annual forecast, providing a boost to investor sentiment.
The rebound in UK shares is a relief for investors who have weathered significant volatility in recent weeks. Concerns over rising inflation and the prospect of higher interest rates have spooked global markets, leading to a sell-off across various asset classes.
Analysts believe that market turbulence is likely to continue as investors grapple with uncertainty surrounding monetary policy and the global economic outlook. However, the recent rebound in shares is a positive sign that investors are finding some stability after a turbulent period.
Investors will now be closely monitoring any developments regarding Metro Bank’s capital raise, as the outcome could have broader implications for the banking sector and investor confidence in the UK.
More detail via Investing.com UK here… ( Image via Investing.com UK )