BRITAIN’S main equity index rallied from three-month lows yesterday, led by advances in banking group Standard Chartered and supermarket chain Sainsbury.
Standard Chartered rose 5.8 per cent, with traders citing the possibility that British finance minister George Osborne might announce changes in a tax on the British banking industry when he spoke last night.
Any move to re-focus the tax on the UK balance sheets of global banks would benefit Standard Chartered, since the bulk of its business is conducted outside Britain, traders said.
“Stan Chart has guided to a $540m levy this year (£340m), so changing the levy to UK-only balance sheets would be very beneficial,” said Mike Trippitt, director of banks equity research at Numis Securities.
Traders were also encouraged by new chief executive Bill Winters, who told staff on his first day the bank must strengthen its finances and simplify operations to boost returns.
Sainsbury shares rose 4.5 per cent. The company reported a sixth straight quarter of declining underlying sales, but some analysts said the company had beat expectations. Short positions in supermarket stocks indicated much of the market was positioned for disappointing numbers.
“Even at these levels, Sainsbury’s profitability will be significantly better than its listed peers ... we continue to believe that Sainsbury is the best placed amongst the three listed supermarkets” Brewin Dolphin equity analyst Nicla Di Palma said in a note.
Sainsbury’s rise pulled up the shares of rivals such as Tesco and Morrisons. Negative bets against British supermarket stocks are at record highs, according to the financial information firm Markit, and stocks can be squeezed upwards when these positions are closed.
The FTSE 100 index ended up 76.47 points, or 1.1 per cent higher, at 6,782.41 points, recovering from its lowest close since mid-March and extending gains in late trade, as Wall Street rallied and European shares firmed on optimism that Greece could reach a deal with its creditors.
Engineer Weir Group was one of only four stocks to end in negative territory, dropping 0.4 per cent after warning of tough conditions for its unit dealing with the oil and gas sector.
Other top FTSE 100 risers included Associated British Foods, Morrison’s and Tesco, while Marks & Spencer, Pearson and HSBC all fell.