Although the FTSE 100 index hit a new all-time high during March – reaching 7,037.67 points – the share prices of larger and medium-sized UK companies generally fell over the month as a whole. Ongoing speculation over US monetary policy, concerns over Greece’s financial commitments and an increasing focus on the forthcoming UK General Election all contributed to this. The FTSE 100 index fell 2.5% in March, while the FTSE 250 index fell 1.1%. For its part, the FTSE SmallCap index rose 1.1% during the month. Over the first three months of 2015 as a whole, the FTSE 100 rose 3.2%, the FTSE 250 climbed 6.2% and the FTSE SmallCap rose 5.3%.
Focusing in on the banking sector, the Bank of England announced its criteria for the latest round of ‘stress tests’ to be undergone by the UK’s financial institutions. The tests are designed to assess whether the UK’s banks and building societies could withstand a global or UK-based economic shock. US regulators meanwhile warned that HSBC and Royal Bank of Scotland should strengthen their respective ‘resolution plans’, which outline their strategies to deal with the possibility of collapse. The Federal Deposit Insurance Corp warned the current plans were “not credible”. Elsewhere in the financial sector, the government sold off another tranche of its shares in Lloyds Banking Group during March, making £500m from the sale and reducing the taxpayer’s stake in Lloyds to just under 23% – down from around 40% in 2009.
Output growth in the construction sector gathered pace during February although Markit warned that uncertainty over the General Election could create a “temporary bump in the road for new work”. That said, housebuilder Taylor Wimpey announced strong full-year profits during March and reported “high” customer confidence with “good levels of employment and an affordable mortgage environment”.
FTSE’s UK equity indices underwent their quarterly review of constituents during March. AA, Virgin Money Holdings and Imagination Technologies joined the FTSE 250, while Oxford Instruments, Game Digital and Afren moved down to the FTSE SmallCap. Hikma Pharmaceuticals moved up from the FTSE 250 to the FTSE 100, ousting Tullow Oil, which has suffered from the sharp drop in the price of oil. Elsewhere, Hardy Oil & Gas – another casualty of the recent fall in the oil price – dropped out of the FTSE SmallCap to join the FTSE Fledgling index.