Proactive Investors -
- FTSE 100 firmer but off highs, up 48 points
- US banks pump US$30bn into First Republic
- BT (LON:BT) falls as Ofgem probes broadband offer
CMA finds Emis deal could hurt competition
The UK Competition & Markets Authority said its initial investigation has found that UnitedHealth Group Inc's £1.2bn deal to acquire Emis Group PLC could reduce competition in the UK health sector, "leading to worse outcomes for the NHS and ultimately patients and UK taxpayers".
As part of its phase 1 probe, the CMA found competition in the fields of population health management and medicines optimisation software would be hurt by the deal. Both Emis and UnitedHealth-owned Optum Health Solutions (UK) Ltd provide software services to GPs in the UK.
The CMA said it is concerned that, if the merger went ahead, Optum could choose to limited digital connections to data that is held by Emis, which it said would "unfairly undermine competing businesses", which would leave the NHS facing fewer options and higher prices or lower quality offerings.
Emis and UnitedHealth have until next week Friday to offer proposals to remedy the CMA's concerns, after which the CMA will have 5 days to consider whether its concerns have been addressed, or to refer the case to phase 2 investigation.
Credit Suisse falls, bucking firmer trend in banks
The Footsie is holding firm on hopes for a calmer day in the banking sector following the recent turmoil.
Shares prices of London banks are broadly higher, although off earlier best levels, but shares Credit Suisse Group AG resumed their downward path, down 3.3% to Swiss Franc 1.95.
US shareholders of the embattled Swiss lender filed a class-action lawsuit against the Swiss bank on Thursday, accusing it of defrauding them by hiding issues related to its finances, according to multiple reports citing court papers.
The plaintiffs claim that Credit Suisse failed to reveal "significant" customer outflows and material weaknesses in its internal controls over financial reporting.
AJ Bell investment director Russ Mould said: ““Right now, the market’s fortunes appear to be tied to a prime slice of Zurich real estate which houses what seems to be Europe’s sickliest big bank. A merger with UBS at the behest of the authorities is apparently being resisted by both parties.”
“Whether the efforts on the part of the Swiss government to prop up the bank prove sufficient, whether Wall Street’s injection into troubled regional institution First Republic overnight works, and whether there are any other vulnerable banks are likely to remain key considerations for investors. The dreaded c-word, contagion, certainly remains in the air.”
“The pace and scale of the rate tightening cycle after a decade of virtually zero interest rates was always likely to reveal stresses and strains in the financial system but if central banks row back, they risk leaving inflation even more entrenched and fostering a sense of panic.”
British banks picking up deposits from SVB fall-out, Reuters
British banks are seeing a pick-up in enquiries to switch cash between institutions after the collapse of US tech lender Silicon Valley Bank, as contagion fears prompt some depositors to try to figure out the safest harbours for their funds, according to a report on Reuters.
Barclays, one of the country's biggest lenders, said it had seen an increase in enquiries to switch or open business accounts in the past few days. Virgin Money, Britain's sixth largest bank, said in a statement it had also seen "net business deposit inflows in recent days".
SVB's failure has rocked global markets over the past week, with contagion concerns spreading to Swiss lender Credit Suisse, forcing the country's central bank to shore up its liquidity on Thursday in a move that brought some respite.
The British government and the Bank of England have said the country's banking system is safe, sound and well capitalised, while the UK arm of SVB was rescued by Europe's largest bank HSBC (LON:HSBA) on Monday.
In the US, leading banks have joined forces to support First Republic Bank, pumping US$30bn in to the troubled bank.
Banks have enjoyed a strong start on Friday helping push the FTSE 100 up to 7,474.43, up 64.40 points, or 0.87%.
FTSE 100 extends gains as a degree optimism returns
The Footsie has extended its gains, now up 72.97, or 0.98%, at 7,483.00.
Analysts at Deutsche Bank led by Jim Reid said: “Some optimism has returned to markets over the last 24 hours, with bank stocks stabilising on both sides of the Atlantic and two-year yields surging back.”
“Even the European Central Bank’s decision to pursue a 50bp hike went without incident, and investors grew in confidence that the Fed would follow up with their own 25bps hike next week, so we’re starting to see a modest change in the mood music.”
“It’s also telling this morning that in Asia, US yields and equity futures are fairly stable.”
However Reid noted: “The concerns haven’t gone away though, as while Credit Suisse saw its equity price increase, its bonds/CDS were generally flat to weaker…”
In London, banks are firmer. Lloyds (LON:LLOY), Barclays and NatWest are up 2.4%, 1.8% and 1.4%. The European Stoxx 600 banks index is up 1.9% while the CAC 40 in Paris was up 1.1% and the DAX 40 in Frankfurt rose 0.9%.
Rising crude prices supported BP and Shell shares. The oil majors rose 4.2% and 3.5%, placing them top of the FTSE 100’s risers.
BP 's shares rose despite, a US federal investigation finding that a BP subsidiary violated workplace safety practices, leading to the deaths of two workers.
The investigation concerns an incident that caused fatal burns to two workers in an Oregon, Ohio refinery's crude unit, operated by BP Products North America. The regulator proposed a fine of US$156,250.
Oil prices were supported by reports that Russian and Saudi Arabian officials met to discuss stabilising the market. Brent crude was trading 0.6% higher at US$75.09/barrel.