The FTSE and European stocks closed lower lower this Tuesday as investors positioned themselves for the Federal Reserve’s May two-day policy meeting, with an interest rate decision due on Wednesday
Shares in two regional US banks have been paused amid fresh concerns about the health of the financial sector in the wake of the rescue of First Republic.
Housebuilders received a boost from Nationwide data showing a monthly increase in house prices for the first time in seven months.
US and Asia
The Federal Reserve is expected to raise rates by a quarter point. Investors' main focus will be on whether Fed officials will give any hints on forward guidance.
Meanwhile, regulators seized First Republic early on Monday and sold most of the bank's operations to JPMorgan in the largest bank failure since the 2008 financial crisis.
JPMorgan Chase CEO Jamie Dimon said that the seizure of First Republic puts to rest a period of panic over the banking system.
"This part of the crisis is over," he told analysts on a Monday conference call.
A number of banks, including JPMorgan and PNC, had submitted bids on Sunday to the Federal Deposit Insurance Corporation to acquire the embattled bank.
However, the crisis doesn't seem to be over as PacWest Bancorp (PACW) and Western Alliance Bancorp (WAL) both "paused" trading in their shares this Tuesday after plunging as much as 36% and 21% respectively to lead a rout in shares of regional banks stocks.
In Asia, markets were higher on Tuesday as most bourses returned after the long Labour Day weekend.
The pound’s (GBPUSD=X) rally against the dollar stalled on Tuesday, with sterling trading at $1.2485.
Sterling (GBPEUR=X) also lost ground against the euro to trade at €1.1368.
Meanwhile, Brent crude (BZ=F) lost ground and was trading at around $76 per barrel amid fears of a slowdown in China’s recovery.