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Provident Financial hit by capital-raising chatter

market relief

market relief

Stock markets in Europe are extending their recovery as investor confidence continues to build.

The severe sell-off that was endured at the beginning of the month is starting to fade in traders’ memories. The CAC 40 hit a level not seen since the start of February, which suggests that a serious amount of confidence has been restored.

Shares in Provident Financial are down 13.5% after it was reported the company is keen to raise £500 million via a rights issue. The troubled lender wants to bolster its balance sheet and it has a few fines that need to be paid, and an influx of capital would help its position. The company issued two profits warnings last year which severely shook investor confidence, and the share price still hasn’t recovered. This morning, the share price level fell to a six-month low, and if it falls below the August low of 541p, it could target 500p.

Hammerson revealed a 28% jump in full-year pre-tax profits and a 6.9% rise in rental income. Occupancy levels rose to a record level of 98.3%, up from 97.5% last year, and the dividend ticked up by 6.5%. It was a strong set of results from the real estate investment trust (REIT), but the industry as a whole is suffering from the rise in online shopping, as major retail parks are starting to become less relevant.

The US dollar index is weaker this morning which has helped GBP/USD and EUR/USD. The greenback has seen major swings recently, and traders are still divided in their outlook in relation to how many interest rate hikes the US will implement this year. The greenback hit a 10-day high on Thursday, but it has retreated since then.

At 3pm (UK time) the US new home sales report is released, and the consensus is for a reading of 645,000, up from 625,000 in December.

We are expecting the Dow Jones to open up 186 points at 25,495 and we are calling the S&P 500 up 13 points at 2760.

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