Investors suffered another roller coaster ride yesterday amid concerns about the banking sector and the wider economy.
The FTSE 100 rose in early trading – up 118 points or 1.6% – in a relief rally sparked by a £45bn lifeline for struggling Swiss bank Credit Suisse.
But London’s blue-chip equity index fell after the European Central Bank (ECB) followed up with an exceptional hike in interest rates despite the turmoil.
Exceptional hike: Many observers thought the ECB would only raise rates by 0.25 percentage points, from 2.5% to 2.75%, but it did not relent, raising rates by 0.5 percentage point to 3%.
Many observers believed the ECB would hike rates by just 0.25 percentage points, from 2.5% to 2.75%, given the pressure the hikes are putting on financial markets and the banking system.
But he didn’t back down, raising rates by 0.5 percentage points to 3%, as he suggested before last week’s chaos.
As investors struggle to take it all in, the FTSE 100 eventually closed up 0.9%, or 65.58 points, at 7410.03 while the FTSE 250 climbed 0.7%, or 132 .73 points, at 18,758.58.
The movements were picked up all over Europe with major references in Paris, Frankfurt and Milan.
All eyes will now be on the US Federal Reserve and the Bank of England as they make their final interest rate decisions next week.
Just as stock markets yo-yoed throughout the day, so did the price of oil, plunging towards $70 a barrel before recovering to around $74. BP fell 0.9%, or 4.35p, to 482.45p and Shell fell 2.2%, or 50.5p, to 2,209p.
Bookmakers across the country will enjoy the biggest betting day of the year today, barring the Grand National, as punters bet on the Cheltenham Gold Cup.
Stock Watch – Gym Band
Gym Group fell 14.4%, or 17p, to 101p after warning of a tough year ahead.
The company, which owns 230 gyms, said memberships increased 14.3% to 821,000 in 2022.
But in the first two months of this year, enrollment has been slower than the same time last year.
It plans to open 12 gyms this year. This would be lower than the 28 sites opened in 2022.
Energy costs are also expected to be around £10m higher this year compared to last year.
It’s been a mixed week for the bookmakers but Ladbrokes spokeswoman Nicola McGeady said they “pretty much had their noses ahead” thanks to shock defeats by heavily backed Mighty Potter in the 2018 run. opening, and of Shishkin in the Ryanair Chase.
With attention now turning to the Gold Cup, Ladbrokes owner Entain was up 1.6%, or 19.5p, at 1213.5p and Paddy Power parent Flutter was up 3 .6%, or 480p, at 13,830p.
There was no stopping rat catcher Rentokil Initial after it posted a nearly 28% rise in annual profit to £532m for 2022 and increased its dividend by 18.2% to 7.55pa . The shares climbed 10.1%, or 50.6p, to 553.6p.
M&G was headed firmly in the opposite direction, with the asset manager continuing its slide over the past few days.
The stock, driven by takeover speculation earlier this year, fell 8.4%, or 16.75p, to 181.65p.
There was little to cheer for former M&G parent Prudential, which rose 1.3%, or 13.5p, to 1049.5p, even as Barclays cut its price target at 1700p versus 1750p.
Electronics chain Currys cut its profit forecast for the second time in just over three months as trade troubles in Scandinavia continue to plague it.
Its Nordic issues offset stronger trade in the UK and Ireland and are expected to leave profits sharply lower, at around £104m.
The shares fell 9.3%, or 6.65p, to 64.95p. Currys lowered his outlook in December to between £100m and £125m for the year to April 2023, from the £125m to £145m he had forecast. It made a profit of £186million the previous year.
It was a similar story at furniture seller DFS, which now expects profits of £30-35million for the full year. This followed a 70% fall in first-half profits to £6.8m. Its shares were flat at 133p.
Private equity group Bridgepoint, which owns Burger King in the UK and arts and crafts supermarket Hobbycraft, rose 5%, or 10.2p, to 215.4p after assets under management fell hit £33bn better than expected.
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