(Alliance News) - Stocks in London were set to open lower on Monday, as regulators try to contain the fallout of Silicon Valley Bank's collapse.
IG says futures indicate the FTSE 100 will open down 7.45 points, or 0.1%, at 7,740.90. The index of large-cap stocks closed down 131.63 points, 1.7%, at 7,748.35, on Friday. It was the FTSE's fourth-successive daily decline.
A number of potential buyers are interested in the UK arm of failed lender Silicon Valley Bank. Chancellor Jeremy Hunt said the UK government was "working at pace" on a plan to prevent customers from going bust, which could involve an emergency private takeover deal.
A survey of 31 venture capital funds, which hold thousands of investments in UK tech and science firms, found that 34% of their portfolio companies – amounting to 336 – have accounts with bank. More than 200 of those now face short or long-term cashflow risk, according to the data from BVCA – the industry body representing venture capital investors.
Around GBP2.5 billion of capital from these firms is locked in the lender.
Many other businesses are feared to be affected, with the Times newspaper reporting that more than 3,000 firms have around GBP7 billion in deposits with with the UK subsidiary.
The Bank of England announced on Friday that Silicon Valley Bank UK is set to enter insolvency, following action taken by its parent company in the US.
Sterling was quoted at USD1.2106 early Monday, higher than USD1.2025 at the London equities close on Friday.
The euro traded at USD1.0718 early Monday, higher than USD1.0637 late Friday. Against the yen, the dollar was quoted at JPY134.39, down versus JPY134.82.
New York ended lower on Friday, with the Dow Jones Industrial Average down 1.1%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.8%.
In Tokyo on Monday, the Nikkei 225 index was down 1.1%. In China, the Shanghai Composite was up 1.0%, while the Hang Seng index in Hong Kong was up 1.9%. The S&P/ASX 200 in Sydney closed down 0.5%.
Gold was quoted at USD1,877.62 an ounce early Monday in London, higher than USD1,859.42 on Friday. Brent oil was trading at USD82.94 a barrel, lower than USD83.02.
In Monday's UK corporate calendar, there are full-year results from Phoenix Group, Direct Line Insurance and HgCapital Trust.
Monday is a quiet day on the economic calendar. Around 1800 GMT, Bank of England Monetary Policy Committee Member Swati Dhingra is due to speak.
The US moved to summer time over the weekend, putting the East Coast four hours behind GMT, rather than five.
By Sophie Rose, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
