Proactive Investors -
- FTSE 100 index back below 7,400
- Wall Street weak as banks remain cautious
- ECB hikes European interest rates by 50 basis points
ECB surprises
Commenting on the ECB surprisingly raising rates as market turmoil following SVB failure continues, Tom Hopkins, Portfolio Manager at BRI Wealth Management, said: “The European Central Bank has stuck to its plans and raised interest rates by 50 bps on Thursday, further pushing borrowing costs to the highest level since late 2008, to help temper the region’s stubbornly high inflation.
"Some may find this increase surprising given investors fears over the strength of the banking system. The failure of Silicon Valley Bank last week has permeated fear across global financials over the last few days resulting in some very heavy sell-offs in European financials.
"The news this morning that Credit Suisse (SIX:CSGN) has secured a loan from the Swiss central banks has brought a small relief rally to markets today however we think it’s too early to tell as to whether the Silicon Valley Bank demise was just a one-off event. All eyes now will turn to the Fed’s rate decision next week.”
Dow weaker at start
The FTSE 100 index saw its gains reduced further as US stocks started with volatility with banking sector woes continuing to weigh, but tech stocks finding some support again.
Around 30 minutes after the opening bell in New York, the Dow Jones Industrial Average was down 176 points, or 0.8%, to 31,698, while the S&P 500 lost 0.6%, but the Nasdaq Composite rallied from opening falls adding 0.1%.
The regional banking sector continued to take hits. First Republic Bank stock was down nearly 30% early Thursday after already taking major losses earlier in the week. Credit Suisse, which announced last night that it would borrow as much as $54 billion from the Swiss National Bank, is up 3%.
Investors are fearful of which banks might be weak links in the wake of the Silicon Valley Bank collapse. That feels familiar, said Greg Fleming, CEO of Rockefeller Capital Management.
“What’s also similar to ’08 is the hunting in the market for who’s the most weak next,” Fleming said on CNBC’s “Squawk Box.” “And the proxy’s been uninsured deposits.”
In London, around 1.55pm, the FTSE 100 index was up 50 points, or 0.7% at 7,394
Here’s a rundown of the top risers and fallers among the smaller caps today
Shares in heat recovery specialist Inspirit Energy Holdings PLC warmed up 33% as it said it was in talks to partner with a “major automotive group” during an operational update, with investors shrugging off “minor” delays due to supply chain issues.
Digital mental health platform provider Kooth PLC saw the weight lifted off its shoulders as its shares rose over 30% on the news it was to deliver its platform en masse in California.
Kooth said it had signed a contract with California’s healthcare services department to roll out its service in the US state to six million 13-25 year olds, under local governor Gavin Newsom’s US$4.7bn investment in youth behavioural health.
Challenger bank OSB Group PLC shares rose after it announced profits above consensus, a £200mln of shareholder returns and, along with the rest of the sector, was carried higher in the rebound from market sell-off earlier in the week.
Burford Capital Limited shares crumpled 20% after a generally positive trading update, where it reported on a better year for cash realisations but a lack of progress on its major Argentinian claim and delayed publication of its full accounts due to ongoing discussions with the US financial regulator.
Talks between the litigation finance funding specialist and the US Securities and Exchange Commission (SEC) have been going on for six months over whether to adopt a new fair valuation methodology for legal finance assets.
The Gym Group PLC saw its shares fall by more than 16% after it warned rising costs would offset improvements in full-year revenue.
In a statement alongside results for the 12 months to December 31, 2022, the no-contract gym operator said it expects the current difficult macroeconomic environment and its impact on consumer demand to continue throughout the year.
Pineapple Power Corporation PLC shares fell 12% after the special purpose acquisition company (SPAC) announced it had raised £350,000 at a price of 3p for general working capital as it looks to retain sufficient funds for any potential acquisition in the renewable energy sector.