Market Report: Brokers pour cold water on Standard Chartered rally

Morgan Stanley repeated its underweight call and slashed its target price from 570p to 410p

‘London will take hits in the context of Brexit,’ the bank boss said (Getty)

Brokers poured cold water on the two-day rally from Standard Chartered shares by convincing investors to head for the Asia-focused bank’s exit. Morgan Stanley repeated its underweight call and slashed its target price from 570p to 410p, dragging shares in the bank, one of last year’s worst blue-chip performers, down 24.2p to 5.3 per cent to 428.85p.

Analyst Chris Manners warned that if the growth of Asian economies stay weak, “bad loans will keep increasing and the market is likely to keep ascribing a higher probability to a bear case scenario”.

The bounce from the stock prompted Investec to downgrade the bank to hold, having only lifted its rating to buy on Friday.

Analyst Ian Gordon, who has buy recommendations on all the other blue-chip banks, said: “We think that the outlook for impairments remains highly uncertain, with extreme volatility in the oil price seemingly driving sudden short-term moves in sentiment.”

Early gains for the oil price were replaced by sharp falls as Opec agreed to freeze production, not cut it, but the FTSE 100 still rose 37.89 points or 0.65 per cent to 5,862.17.

Defensive names became investors’ weapons of choice, with Alton Towers operator Merlin Entertainments up 13.2p to 415p, Royal Mail 9p firmer at 441.1p, and British American Tobacco 69p healthier at 3,844p.

Shire chief executive Flemming Ornskov tried to instil confidence in investors miffed by its $32bn takeover of US rare disease rival Baxalta by buying shares in the Footsie drug maker out of his own pocket. He bought more than $200,000 of Shire’s American-listed shares, but their value declined 57p to 3,740p on the LSE after JPMorgan trimmed its target price to 5,300p.

Industrial controls firm Spectris, up 133p at 1,648p, topped the FTSE 250 after an expected 8 per cent fall in pre-tax profits to £176.3m as oil spending cuts took its toll on customer spending.

Elsewhere, posh tonic maker Fever-Tree was unchanged at 569.5p as cider drinks company Brothers, which has been bottling the firm’s tonic, slimmed down its stake to below 4 per cent.