Yahoo Finance FTSE 100 Live: Top US banks in First Republic rescue, FTSE closes at 7410 as Credit Suisse fears ease
Credit Suisse’s move to borrow up to £44 billion from Switzerland’s central bank today led to a calmer session after yesterday’s turmoil for European banking stocks.
The FTSE 100 index slumped 3.8% by last night but stood 1% higher today after the troubled bank said it was taking “decisive action to pre-emptively strengthen liquidity”.
A busy session for corporate results included figures from Rentokil Initial, Savills and Deliveroo, with the food delivery firm reporting a reduced loss of £294 million.
FTSE 100 Live Thursday
Bank shares steady on Credit Suisse support
John Lewis Partnership reveals £234m loss
Deliveroo loss narrows to £294 million
Healthcare and industrial product supplier Diploma announced £76 million acquisition
17:12 , Daniel O'Boyle
Healthcare and industrial product supplier Diploma has acquired Tennessee Industrial Electrics - which makes parts for industrial automation machines - for £76 million.
Diploma also announced a cappial raise of around 7.5% of the current issued share capital of the company.
FTSE rallies again to close at 7410.03
16:43 , Daniel O'Boyle
The FTSE 100 ralllied again this afternoon after most of its gains were erased in the early afternoon, finishing the day at 7410.03.
The blue-chip index started the day strong after losing more than 3% yesterday, but the initial rally was wiped out when the European Central Bank announced a 50 basis points hike in interest rates.
However, reports that the top banks in the US were considering a rescue package for struggling regional lender First Republic helped to ease fears of a wider banking sector crisis.
Top US banks in First Republic Rescue: report
16:12 , Daniel O'Boyle
America’s biggest banks are preparing a rescue package for struggling lender First Republic Bank, according to the Wall Street Journal.
JPMorgan, Citigroup, Bank of America and Wells Fargo are said to be working on a deal to save the regional bank, which had seen its share price fall by 80% in the space of a week followng the collapse of Silicon Valley Bank. However, the report added that a potential deal is still “highly uncertain”.
First Republic shares were up 28.9% on the news of a potential rescue deal at $26.10, but were still well below yesterday’s close.
London journey planner app Citymapper acquired by billion dollar US tech firm Via
15:17 , Simon Hunt
Popular London navigation app Citymapper has been sold to tech firm Via in a cash-and-stock deal.
Via said the deal would allow it to integrate Citymapper into its platform, allowing it to connect all elements of a transport system, to offer “a unified solution and exceptional journey planning experience.”
Via would not disclose the size of the transaction.
New CEO at Carlsberg
14:24 , Daniel O'Boyle
Carlsberg has appointed Jacob Aarup-Andersen as its new CEO.
Aarup-Andersen will replace Cees ’t Hart, who will retire by the end of Q3 2023 at the latest. He was previously CEo of facilities management business ISS A/S.
“As part of our ongoing succession planning, the Board has been through a comprehensive assessment of CEO candidates from around the world, with Jacob Aarup-Andersen emerging as the best candidate,” Carlsberg chair Henrik Poulsen said, “Jacob is an outstanding CEO with a strong track record in delivering shareholder value and organic and inorganic growth in addition to driving the ESG and digitisation agendas.”
US shares down further
14:16 , Daniel O'Boyle
US shares are down again this morning, despite rallies in Europe.
The S&P 500 was down 0.5% to 3873, while the Dow Jones was down 0.8% to 31610. The Nasdaq dipped slightly to 11421.
First Republlic Bank - which has been the subject of major sell-offs in the past week - was the biggest faller in the S&P 500, with shares down 33% to $20.93.
FTSE gains erased after ECB decision
13:32 , Daniel O'Boyle
The FTSE 100’s gains earlier today have been erased, with the index falling back to where it started the day after the European Central Bank’s 50-basis-point rate hike.
Though it had risen by 1% this morning as fears about the banking sector eased, the FTSE fell back to 7350 today, within 0.1% of yesterday’s close, as the bank signalled inflation was still its top priority.
ECB puts inflation first as it raises rates by 0.5%
13:29 , Daniel O'Boyle
The European Central Bank (ECB) maintained the pace of interest rate hikes despite fears about the strength of the global banking systems after massive sell-offs this week.
The ECB increased its key rate by 0.5% to 3% even though markets had suddenly shifted exectations in the last 48 hours as a result of the worsening outlook for the financial markets
The bank, which has Christine Lagarde as its President, said it had made the decision because “inflation is projected to remain too high for too long. Therefore, the Governing Council today decided to increase the three key ECB interest rates by 50 basis points, in line with its determination to ensure the timely return of inflation to the 2% medium-term target.”
ECB hikes rates by 50 basis points
13:20 , Daniel O'Boyle
The Credit Suisse crisis was not enough to prevent the European Central Bank from raising interest rates by 50 basis points.
Inflation remained the top priority for the bank, as it opted to pursue a rise of half a percentage point rather than a quarter.
Though the Credit Suisse crisis led to speculation yesterday that the ECB’s next rate rise might be more gentle, by the time of the decision consensus had settled on a 50 BP rise being the most likely option.
US banks set to open lower
12:24 , Daniel O'Boyle
Shares in a number of US banks are set to decline further, based on futures markets.
Shares in First Republic Bank are set to fall another 27% to $22.80, having traded at $115 a week ago. Other regional banks such as Comerica and KeyCorp are also set to decline, though more modestly.
Dow Jones and S&P 500 futures, meanwhile, are both down, though Nasdaq futures are up.
Will Credit Suisse crisis impact ECB rates decision?
12:11 , Daniel O'Boyle
The European Central Bank will make a decision on whether to raise interest rates further today, as trouble in the banking sector may encourage a more dovish position.
The central bank had been expected to raise rates by 50 basis points, but after the collapse of Silicon Valley Bank - triggered in part by the impact of higher interest rates on its bond portfolio - fears of contagion spread to Europe, with trading in a number of major lenders including Credit Suisse halted yesterday.
However, Matthew Ryan, head of market strategy at global financial services firm Ebury, said he thinks a 50 basis point hike is still the most likely option.
““Interest rate markets had lowered their expectations for hikes across the board earlier in the week, including in Europe, although investors seem to be back on board with a 50bp move, which is now almost fully priced in again,” he said.
PensionBee CEO welcomes pensions reforms as assets top £3 billion
11:53 , Simon Hunt
The CEO of PensionBee has welcomed reforms to the lifetime allowance announced in the Spring Budget yesterday as the firm’s assets under administration crossed £3 billion for the first time.
Romi Savova told the Standard lifting the lifetime pensions allowance was “a helpful move.”
“It sends a message that you won’t be penalised for saving too much, which I think used to be the view around the lifetime allownance,” she said.
“But as we know, chancellors and budgets can come and go.”
Revenue at the firm went up 38% to £17.7m, while its customer base climbed 56% to 183,000.
PensionBee shares fell 1.5% to 97p.
Savova has a net worth of £89 million according to the Evening Standard Tech Rich List.
Shares rally after huge bank bailout of Credit Suisse
11:48 , Daniel O'Boyle
Shares rallied in London on Thursday after the Swiss authorities launched an emergency £45 billion rescue of one of its biggest banks to avert a global financial crisis.
The move to bail-out stricken Credit Suisse came in the early hours after days of turmoil on the global financial markets that was threatening to spiral into a full-blown crash. Europe’s 16th biggest bank said it would have access to 50 billion Swiss francs (£44.6 billion) of funding from the Swiss National Bank to shore up its balance sheet.
The bank, which has as many as 7,000 staff working in London, mostly at Canary Wharf, called the loan a “decisive action to pre-emptively strengthen its liquidity”.
Swiss government to hold “urgent” meeting on Credit Suisse crisis - report
11:40 , Daniel O'Boyle
The Swiss Federal Council is to hold an “urgent” special session to address the situation at Credit Suisse, according to reports.
Swiss financial news outlet AWP Finanznachrichten reported that the Council will meet for an extraordinary session today, one day ahead of its next planned meeting, as they consider the matter “urgent”.
Early this morning, the bank said it would borrow up to 50 billion Swiss francs (£44.6 billion) from Switzerland’s central bank as part of efforts to “pre-emptively” strengthen its liquidity position.
Credit Suisse shares - and banking shares in general - plunged yesterday after its top shareholder said it would not provide any more support, but rallied after the deal with the Swiss National Bank.
Would you buy bank shares?
11:10 , Simon English
The collapse of SVB and serious troubles at Credit Suisse have unnerved investors in all banks.
Are the shares basically uninvestible?
Rob Burgeman at RBC Brewin Dolphin said: “On the face of it, the bailout for Silicon Valley Bank (SVB) essentially being restricted to depositors – with equity and bond holders essentially being thrown to the wolves – does remind people that investing into the banking sector a riskier proposal than it seemed just a few days ago. “As for Credit Suisse, messy as it looks, it is almost inconceivable that the bank would be allowed to collapse à la Lehman Brothers – the potential fallout would be catastrophic. I certainly wouldn’t want to be a shareholder or bondholder, but we think that the latest falls are more to do with sentiment towards the banking sector, in general, and the weaker banks, in particular.”
Rentokil Initial leads FTSE 100 recovery, Currys down 4%
10:22 , Graeme Evans
Rentokil Initial led the FTSE 100 index today as the rat catcher gave investors a reminder of its appeal as a stock for uncertain times.
Shares jumped 7% or 33.6p to 536.6p, driven by a 28% rise in annual profits to £532 million and “excellent early progress” on Rentokil’s transformational purchase of US operator Terminix.
The deal, which reinforced Rentokil’s place as the world’s largest pest control company, is now set to deliver larger than expected cost synergies and today contributed to Rentokil raising its medium-term revenues growth target to at least 5%.
Wealth Club head of equities Charlie Huggins said the pest control-to-hygiene services company was better placed than most to weather an economic downturn.
He added: “Rats need dealing with, no matter what’s happening to inflation or the economy. Add this to a large slug of recurring revenue from long term contracts and it adds up to a resilient business with decent pricing power.”
Today’s improvement means Rentokil’s shares are in positive territory for the year, having been impacted by worries over the risks of the Terminix deal struck in 2021.
It was joined at the top of the blue-chip risers board by gains of around 3% for banking stocks including Barclays and Lloyds as sentiment in the sector steadied after yesterday’s pummelling.
The FTSE 100 index improved 0.7% or 50.30 points to 7394.75, while the FTSE 250 index lifted 36.20 points to 18,662.05.
Retail stocks came under pressure, with electricals chain Currys down 4% or 2.65p to 68.95p after it said conditions in the Nordics remain very challenging as it grapples with high cost inflation and “unrelenting competitive intensity”.
Full-year profits of £104 million will now be at the lower end of its previous £100 million to £125 million guidance, but Currys said it is taking decisive action through the appointment of a new chief executive to run the Nordics business.
Among other consumer-focused stocks in the FTSE 250, Dunelm fell 3% or 44p to 1129p and Moonpig dropped 3.5p to 115.4p.
Prax Group to acquire oil field operator Hurricane in £249 million deal
09:58 , Daniel O'Boyle
Prax Exploration & Production has agreed to acquire oil exploration company Hurricane Energy for as much as £249 million.
Prax will pay 4.15p per Hurricane share up front, plus a supplementary payment of 1.87p per share and a contingent consideration of up to 6.48p per share.
At full price, the deal would be an 84% premium from Hurricane’s share price at the close of trading on 1 November, before it announced details of a possible sale.
“I am pleased by the outcome of what has been a thorough and exhaustive formal sale process,” Hurricane chairman Philip Wolfe said.
“The Hurricane board believes that the acquisition will deliver more cash than Hurricane shareholders are likely to have received from Hurricane’s Lancaster oil field, on a much expedited timeframe, as well as mitigating the risks associated with production from a single well development.”
Pain and no gain for Gym Group after uneven start to 2023
09:19 , Simon Hunt
Shares in the Gym Group sunk 15% to 99p this morning after the low-cost operator sounded the alarm on an “uneven start” to 2023, warning that future revenue increases would be offset by cost increases.
The firm posted a loss of £19.3 million for 2022 — lower than the £35.4 million loss it suffered the previous year but well behind the £14 million profit it made in its last full trading year before the pandemic.
Gym Group Chair John Treharne said: “We hoped 2022 would see a return to a more normal trading environment.
“It is now clear that it will take a longer time to return to pre Covid-19 levels as a result of both the changes to customers’ everyday lives and the macroeconomic headwinds that we are all facing.”
The stock is down 45% over the past year.
The company had a record 28 new gym openings in 2022, but said it would take “a more measured approach” to new openings in 2023.
DFS aims to cut costs are profit tumbles amid lower H1 margins
09:16 , Daniel O'Boyle
DFS is looking to cut costs across "the full spectrum" of its cost base, after profits were down by 70% in the first half of its financial year.
In the year to 25 December, revenue was down by 2.2% year-on-year to £544.5 million, but costs increased, causing profits to tumble to £7.1 million.
In response, the business said it had a plan to bring margins back up and was “reviewing the full spectrum” of its cost base.
The results came amid a decline in the wider furniture market, with DFS gaining market share from its competitors.
The group also revised its full-year profit guidance downwards, to between £30 million and £35 million.
DFS shares are down 5p to 128p.
Credit Suisse lifeline helps shares rally
08:50 , Graeme Evans
Credit Suisse shares have rebounded 24%, ending a run of eight consecutive sessions in the red that culminated in yesterday’s 24% slide to a record low.
European stock markets are also 1% higher after Switzerland’s central bank shored up confidence with its offer of support for Credit Suisse. It added that capital and liquidity levels at the lender were adequate for a systemically important bank.
Capital Economics said markets will be looking to see whether concerns shift from Credit Suisse to other parts of the financial sector.
Its chief economist Neil Shearing said: “The problems at Credit Suisse are very different to those that brought down SVB a few days ago. But they serve as a reminder that as interest rates rise, vulnerabilities are lurking in the financial system.
“Key areas to monitor are smaller European banks and shadow banks, particularly open-ended funds that might suffer from maturity mismatches.”
FTSE 100 opens higher, Barclays recovers after 9% fall
08:08 , Graeme Evans
The FTSE 100 index has opened 98.94 points or 1.35% higher at 7443.39 after the intervention by Switzerland’s central bank helped calm Credit Suisse fears.
Among London shares, Barclays shares rose 4% or 5.4p to 143.6p after losing 9% yesterday. Shell also steadied following yesterday’s big fall, adding 25.5p to 2285p.
The FTSE 100 index fell 3.8% amid the Credit Suisse turmoil and is down 8% since topping 8000 for the first time last month.
Currys appoints new chief to warm up its Nordic business as problems there linger
07:56 , Michael Hunter
The UK’s biggest electronics retailer has appointed a new regional chief for its troubled Nordic business as it moves to turn the unit around amid heavy competition from rivals there.
Currys said Fredrik Tønnesen will step up from chief operating officer to take over from Erik Sønsterud, who is stepping down as regional CEO “with immediate effect”.
Heavy discounting on pricing in Sweden, Denmark and Norway came in part as local rivals there sold off excess stock as they withdrew from Russian markets. Currys previously described the discounting as “desperate and said it “crashed pricing” across the market, which meant “nobody was much, if any, money”.
Today, it said the Nordics performance was “weaker” and “remains very challenging” in a “tough consumer environment”, with “high cost inflation and unrelenting competitive intensity.” But it added that “decisive action” was “underway”.
Currys stood by its group profit guidance for the year, saying it would be “broadly in line” with consensus forecasts of £104 million, albeit at the lower end of the previously guided range of £100 million to £125 million.”
FTSE 100 seen higher, focus on ECB rates decision
07:46 , Graeme Evans
London’s FTSE 100 index is expected to recoup some of yesterday’s heavy losses, with IG index futures seeing a 0.9% rise to about 7400.
The Credit Suisse crisis and resulting impact on commodity prices meant the FTSE 100 was hit hard yesterday, given its weighting towards financial and resources stocks.
The top flight fell 3.8% in its worst session since Russia’s invasion of Ukraine, with the likes of Shell and Anglo American down 8% and Barclays off 9%.
The S&P 500 index fell by more than 2% at one point but recovered to finish 0.7% lower amid speculation of limited US banking exposure to Credit Suisse.
Wall Street futures are pointing to a flat session today as traders continue to revisit their expectations on what the events of the past week will mean for interest rates.
The immediate focus is on today’s meeting of the European Central Bank and whether policymakers stick with their pre-announced plan to raise the deposit rate from 2.5% to 3% or put the rise on hold.
07:45 , Simon English
The John Lewis Partnership plunged to a loss of £234 million for the year, and said it could not afford to pay staff their traditional bonus.
Sharon White, the chairman, said it had been a “tough” time.
She insists the balance sheet remains strong, with £1 billion of cash on hand, but there is no doubt there are concerns about the future of what has often been regarded as the best retailer in Britain.
Sales for the year fell by 2% to £12.25 billion overall and were down 3% at Waitrose.
The grocer attracted more customers, “but they bought less” said White.
She is trying to transform the group and admits that some of the group’s problems are self-inflicted.
“It is also the case that we had some set-backs. Product supply challenges and a major fire in our Brinklow warehouse hit availability in Waitrose last summer. This was recovered through autumn and availability is now strong,” she said.
The loss came from poorer trading and a write down in the value of Waitrose stores.
Staff bonuses have been a celebrated part of working for the Partnership. In the good years they were as high as 17% of salary.
Bank of England Governor Andrew Bailey monitoring Credit Suisse crisis “very closely”
07:27 , Graeme Evans
Bank of England governor Andrew Bailey is following the Credit Suisse crisis “very closely” but news of a huge intervention by the Swiss central bank was “encouraging,” Jeremy Hunt said on Thursday.
The Chancellor was keen not to say too much publicly on the situation facing the large European bank.
Asked if he was worried about the risk of contagion to British banks he told Sky News: “Chancellors never comment on what is happening in the markets.
“Obviously, I’m following the situation, the Governor of the Bank of England is following it very closely.
“The news we have heard from the Swiss authorities this morning is encouraging but I won’t say any more than that.”
Last night Credit Suisse said it intends to borrow 50 billion Swiss francs from the central bank to shore up its liquidity.
High-end London homes limit mini-Budget impact for Savills
07:27 , Daniel O'Boyle
The strength of the market for luxury London properties helped insulate estate agent Savills from the effects of macroeconomic troubles in 2022, but the business is less optimistic about 2023.
The company said “the volume of global real estate investment activity declined substantially in 2022”, yet its revenue was up 7% to £2.30 billion and “sustantially” ahead of 2019 levels.
A major reason for this was the strength of the market for prime London properties, which helped mitigate a sharp drop in commercial property transactions in the second half of the year that came as investment markets “slowed considerably”.
“In the UK, the housing market remained stronger for longer than anticipated, with the prime London housing markets particularly resilient,” the business said. “The international nature of the prime London market, with lower dependence upon mortgage financing relative to the wider markets and attractive valuations in a global context, should partially mitigate the effect of further volume reductions in the residential market overall.”
Pre-tax profit, however, was down 16% to £164.6m.
Looking ahead, CEO Mark Ridley said the first half of 2023 could be challenging.
Credit Suisse to borrow up to £44.6 billion
07:24 , Graeme Evans
Credit Suisse is to borrow up to 50 billion Swiss francs (£44.6 billion) from Switzerland’s central bank as part of efforts to “pre-emptively” strengthen its liquidity position.
The action follows yesterday’s turmoil for stock markets after the troubled lender’s biggest shareholder said it would not offer more financial support. Credit Suisse shares fell by 24% and dragged other European banks lower, leaving the FTSE 100 down 3.8%.
Chief executive Ulrich Koerner said this morning: “These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.
“We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
The bank pointed out that it was subject to high regularory standards on capital, funding, liquidity and leverage. At the end of last year, it had a capital buffer of 14.1% and an average liquidity coverage ratio of 144%, which has since improved to about 150%.
Deliveroo gets a boost in sales as losses narrow
07:23 , Simon Hunt
Deliveroo saw a boost to sales in 2022 as it took a step closer on its path to profitability.
The London-based firm reported sales of just under £2 billion in 2022, while losses narrowed £36 million to £294 million.
The value of each order climbed 1% in the UK to £24.50, suggesting it had fallen in real terms.
Will Shu, Founder and CEO of Deliveroo, said: “I’m proud of our performance in the past 12 months.
“The macroeconomic outlook for the year ahead remains uncertain, but our record in the past 12 months makes me optimistic about our ability to adapt and continue to deliver on our plans to drive profitable growth.”
Recap: Yesterday’s top stories
06:52 , Simon Hunt
Good morning. Here’s a look at our top stories from yesterday.
Jeremy Hunt said the UK would not enter recession as he delivered his Spring budget. Here are the key points.
There were fears over the health of the banking sector after Credit Suisse shares plunged.
Prudential backed the City and said it had no plans to move away from a London listing.
High street banks are seeking to lure tech firms away from Silicon Valley Bank after its UK arm was rescued.
Today we’re expecting results from:
Savills
PensionBee
Rentokil
Deliveroo
Gym Group
