FTSE 100 Live March 16: Credit Suisse shares rebound amid central bank lifeline, Deliveroo reports loss

Credit Suisse lifeline supports equity rally

Credit Suisse shares rallied 24%, ending a streak of eight consecutive sessions in the red that culminated in yesterday’s plunge of 24% to a record low.

European stock markets are also up 1% after Switzerland’s central bank boosted confidence with its support bid for Credit Suisse. It added that the lender’s capital and liquidity position was adequate for a systemically important bank.

According to Capital Economics, markets will be watching to see if 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 from those that brought down the SVB a few days ago. But they remind that as interest rates rise, vulnerabilities lurk in the financial system.

“Key areas to monitor are smaller European banks and shadow banks, particularly open-ended funds, which may suffer from maturity mismatches.”

FTSE 100 opens higher, Barclays rebounds after a 9% drop

The FTSE 100 index opened 98.94 points, or 1.35%, higher at 7443.39 after Swiss central bank intervention helped calm fears at Credit Suisse.

Among London stocks, shares of Barclays rose 4% or 5.4p to 143.6p after losing 9% yesterday. Shell also stabilized after yesterday’s big drop, rising 25.5p to 2285p.

The FTSE 100 index fell 3.8% amid the turmoil at Credit Suisse and is down 8% since it first broke above 8000 last month.

Currys appoints new boss to warm up its Nordic business as troubles persist there

The UK’s largest electronics retailer has appointed a new regional head for its ailing Nordic business in a bid to reverse the unit amid stiff competition from rivals there.

Currys said Fredrik Tønnesen will step up from chief operating officer to succeed Erik SOnsterud, who is stepping down as regional CEO “effective immediately”.

Sharp discounts in Sweden, Denmark and Norway came in part as local competitors there sold excess inventory as they exited the Russian markets. Currys previously described the discounting as “desperate and said it brought pricing to a halt across the market, meaning that “no one had much, if any, money.”

Today it was said that the Nordic countries’ performance is “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 £104m, albeit at the lower end of the previously forecast range of £100m to £125m.”

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FTSE 100 seen higher, focus on ECB rate decision

London’s FTSE 100 index is expected to erase some of yesterday’s heavy losses, with IG index futures up 0.9% to around 7400.

The Credit Suisse crisis and the resulting impact on commodity prices meant the FTSE 100 was hit hard yesterday as it is weighted in financials and commodity stocks.

The major league fell 3.8% in its worst session since Russia invaded Ukraine, with Shell and Anglo American down 8% and Barclays down 9%.

The S&P 500 index fell more than 2% at one point but then rebounded to finish 0.7% lower amid speculation of limited US bank exposure to Credit Suisse.

Wall Street futures are pointing to a flat session today as traders continue to reconsider their expectations of the significance of last week’s events for interest rates.

The immediate focus is on today’s European Central Bank meeting and whether policymakers stick to their previously announced plan to raise the deposit rate from 2.5% to 3%, or shelve the hike.

The John Lewis Partnership plunged to a £234million loss for the year and said it could not afford to pay staff its traditional bonus.

Sharon White, the Chair, said it had been a “tough” time.

She insists the balance sheet remains strong with £1billion in cash on hand, but there is no doubt there are concerns about the future of what is often seen as the best retailer in the UK.

Annual sales fell 2% overall to £12.25 billion and were down 3% at Waitrose.

The grocer attracted more customers, “but they bought less,” White said.

She attempts to reshape the group, admitting that some of the group’s problems are self-inflicted.

“It is also the case that we had some setbacks. Product supply challenges and a major fire at our Brinklew warehouse impacted availability at Waitrose last summer. This was restored in the fall and availability is strong now,” she said.

The loss came from worse trading and a write-down on the value of Waitrose stores.

Employee awards are a celebrated part of working for the partnership. In the good years they were up to 17% of the salary.

Bank of England Governor Andrew Bailey is watching Credit Suisse crisis ‘very closely’

Bank of England Governor Andrew Bailey is following the Credit Suisse crisis “very closely” but the news of massive intervention by the Swiss central bank is “encouraging,” Jeremy Hunt said on Thursday.

The Chancellor did not want to comment too much on the situation of the major European bank in public.

Asked if he was worried about the risk of contagion for UK banks, he told Sky News: “Chancellors never comment on what’s happening in the markets.

“Of course I am following the situation, the Governor of the Bank of England is following it very closely.

“The news we received from the Swiss authorities this morning is encouraging, but I will say no more.”

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

The strength of the luxury property market in London has helped insulate real estate agent Savills from the impact of macroeconomic troubles in 2022, but the company is less optimistic about 2023.

The company said that “the volume of global property investment activity fell significantly in 2022” but its turnover rose 7% to £2.30 billion and was “significantly” above 2019 levels.

A key reason for this was the strength of the prime London property market, which helped mitigate a sharp decline in commercial property transactions in the second half of the year, which came as investment markets “slowed significantly”.

“In the UK, the housing market has remained stronger for longer than expected, with prime London housing markets being particularly resilient,” the company said. “The international nature of the prime London market, with less reliance on mortgage financing than the broader markets and attractive valuations in a global context, should partially mitigate the impact of further volume reductions in the overall housing market.”

However, pre-tax profit fell 16% to £164.6m.

Looking ahead, CEO Mark Ridley said the first half of 2023 could be challenging.

Credit Suisse wants to borrow up to £44.6 billion

Credit Suisse will borrow up to 50 billion Swiss francs (£44.6 billion) from the Swiss central bank to “preventively” strengthen its liquidity position.

The action follows yesterday’s turmoil in stock markets after the troubled lender’s largest shareholder said it would not offer any further financial support. Credit Suisse shares fell 24%, dragging other European banks lower, sending the FTSE 100 down 3.8%.

Chief Executive Ulrich Koerner said this morning: “These actions demonstrate determined action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.

“We would like to thank the SNB and FINMA for implementing our strategic transformation. My team and I are committed to moving fast to deliver a simpler and more customer-focused bank.”

The bank noted that it is subject to high regular capital, funding, liquidity and debt requirements. 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 around 150%.

Deliveroo gets a sales boost as losses narrow

Deliveroo saw sales surge in 2022 as the company took a step closer to its path to profitability.

The London-based company reported sales of just under £2 billion in 2022 while losses narrowed by £36 million to £294 million.

The value of each order rose 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 over the past 12 months.

“The macroeconomic outlook for the year ahead remains uncertain, but our track record over the past 12 months gives me optimism that we can adapt and continue to deliver on our plans to drive profitable growth.”

Summary: Yesterday’s top stories

Good morning Here’s a look at our top stories from yesterday.

Today we expect results from:

• Savills
• PensionBee
• Rentokil
• Deliveroo
• gym group