FTSE higher but there is banking trouble ahead

Better-than-expected UK retail numbers and another European country declaring that it is virus free helped lift London stocks. US-China relations seem to be thawing and China now plans to step up its buying of US agricultural products, fulfilling its part of the agreement that was part of the Phase One of the Sino-US trade deal. Markets have shrugged off the ongoing weakness in the US job market where initial jobless claims increased more than expected and instead are focusing on the bounce backs in the economy that is accompanying the reopening across the UK and Europe.

But trouble might be brewing.

The shocking loss at Wirecard, the German online payment processor, which claims that fraudsters have taken €1.9 billion from its accounts, has put the company in a perilous positon. It was due to publish its results tomorrow but because of the gaping hole it may not do that, thus giving banks the option to terminate €2 billion in loans they have extended to Wirecard. Although its links with UK banks are not clear yet there is some nervousness in London where Lloyds Bank, normally the by far the most traded share in London, has slipped into the red and is seeing only a fraction of its usual traffic.

Among the main FTSE risers are drinks maker Diageo and exhibition organiser Informa, while oil firms also rallied on the back of stronger oil prices.  

Iraq, Kazakh pledge lifts Brent crude

OPEC+ has intensified pressure on those members which don’t honour their production cut commitments, particularly Iraq, Nigeria and Kazakhstan, and as part of this has introduced monthly monitoring. The monitoring panel had its first meeting yesterday and managed to extract promises from Iraq and Kazakhstan that they will make up for their overproduction in May. Brent crude’s rally of over 2.3% this morning made up for losses this week, caused by still rising stock levels in the US.

Better-than-expected UK retail numbers and another European country declaring that it is virus free helped lift London stocks. US-China relations seem to be thawing and China now plans to step up its buying of US agricultural products, fulfilling its part of the agreement that was part of the Phase One of the Sino-US trade deal. Markets have shrugged off the ongoing weakness in the US job market where initial jobless claims increased more than expected and instead are focusing on the bounce backs in the economy that is accompanying the reopening across the UK and Europe.

But trouble might be brewing.

The shocking loss at Wirecard, the German online payment processor, which claims that fraudsters have taken €1.9 billion from its accounts, has put the company in a perilous positon. It was due to publish its results tomorrow but because of the gaping hole it may not do that, thus giving banks the option to terminate €2 billion in loans they have extended to Wirecard. Although its links with UK banks are not clear yet there is some nervousness in London where Lloyds Bank, normally the by far the most traded share in London, has slipped into the red and is seeing only a fraction of its usual traffic.

Among the main FTSE risers are drinks maker Diageo and exhibition organiser Informa, while oil firms also rallied on the back of stronger oil prices.  

Iraq, Kazakh pledge lifts Brent crude

OPEC+ has intensified pressure on those members which don’t honour their production cut commitments, particularly Iraq, Nigeria and Kazakhstan, and as part of this has introduced monthly monitoring. The monitoring panel had its first meeting yesterday and managed to extract promises from Iraq and Kazakhstan that they will make up for their overproduction in May. Brent crude’s rally of over 2.3% this morning made up for losses this week, caused by still rising stock levels in the US.