FTSE 100 close: Wall Street sea of red offsets HSBC and Persimmon gains in London

 London’s FTSE 100 was dragged deep into the red in the final hours of trading today after Wall Street was pushed lower by investors sweating over more possible banking collapses.

The capital’s premier index initially climbed in the morning before eventually closing 1.23 per cent lower at 7,774.12 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 0.49 per cent to 19,330.52 points.

Losses in London gathered pace after US traders restarted their sharp sell off of regional bank shares despite authorities brokering a sale of troubled lender First Republic to JP Morgan earlier this week.

Lawmakers seemingly will have to do more to convince markets they have contained the turmoil in the US regional banking sector, which has been sparked by the US Federal Reserve hiking interest rates aggressively.

Fed officials are tipped to raise rates again tomorrow, by 25 basis points, raising the risk of further strain in the US banking system propping up, likely amplifying investor jitters today.

Wall Street’s top three indexes, the tech-heavy Nasdaq, S&P 500 and Dow Jones all collapsed around 1.5 per cent during opening exchanges today.

The FTSE 100’s early advances were driven by HSBC, Britain’s biggest lender, telling investors profits tripled in the first three months of this year, prompting them to pile into the banking sector.

Dividends and share buy backs are back at the Asia-focused lender, sparking hopes that other big banks will follow HSBC.

Its shares rose just under four per cent and to near the top of the FTSE 100.

“HSBC may have found growth hard to come by over recent years, but its sheer scale and financial strength sets it apart in times of turmoil, as recently witnessed in the banking sector,” Richard Hunter, head of markets at interactive investor, said.

The firm has been grappling with an Asia shareholder revolt, spearheaded by its largest investor, Ping An.

New numbers out from building society Nationwide this morning revealed house prices jumped for the first time in over half a year, up 0.5 per cent, prompting traders to hoover up shares in Britain’s biggest house builders.

Persimmon leapt around five per cent to the top of the FTSE 100, trailed closely by Taylor Wimpey and Barratt Developments.

Economists have persistently said house prices could fall sharply this year in response to the Bank of England hiking interest rates aggressively.

Anchoring the FTSE 100 was oil megacap BP shedding more than eight per cent on the firm trimming its profit outlook and mounting fears that the government will toughen up its windfall tax on the energy sector. 

Educational publisher Pearson collapsed about 15 per cent and to the bottom of the premier index.

The pound weakened about 0.3 per cent against the US dollar.

Oil prices suffered intense selling, with WTI and Brent Crude each collapsing around 3.5 per cent.