MARKET REPORT: Roller coaster ride for investors as ECB hikes rates

Investors endured another roller coaster ride yesterday due to concerns about the banking sector and the economy in general.

The FTSE 100 rose 118 points, or 1.6 percent, in early trading in a relief rally fueled by a £45 billion bailout for troubled Swiss bank Credit Suisse.

But London’s blue-chip stock index fell after the European Central Bank (ECB) pushed ahead with a massive rate hike despite the turmoil.

Bumper hike: Many observers thought the ECB would raise rates by just 0.25 percentage point, from 2.5% to 2.75%, but it was unyielding and raised rates by 0.5 percentage point to 3%

Many observers thought the ECB would raise interest rates by just 0.25 percentage point, from 2.5 percent to 2.75 percent, given the strain the hikes are putting on financial markets and the banking system.

But it was unyielding, raising rates by 0.5 percentage points to 3 percent, as it had suggested before last week’s chaos.

With investors struggling to take it all in, the FTSE 100 eventually closed up 0.9 percent, or 65.58 points, at 7410.03 while the FTSE 250 climbed 0.7 percent, or 132.73 points, to 18,758, 58.

The moves resonated across Europe with major whipsaw benchmarks set in Paris, Frankfurt and Milan.

All eyes will now be on the US Federal Reserve and the Bank of England when they make their final rate decisions next week.

Just as the stock markets yoyoed all day, so did the price of oil, plunging to $70 a barrel before recovering to around $74. BP was down 0.9 percent, or 4.35p, to 482.45p and Shell was down 2.2 percent, or 50.5p, to 2209p.

The country’s bookmakers will enjoy the biggest gambling day of the year today, other than the Grand National, as gamblers bet on the Cheltenham Gold Cup.

Stock Watch – Gym Group

Gym Group fell 14.4 percent, or 17 pence, to 101 pence after it warned of a difficult year ahead.

The company, which owns 230 gyms, said membership is up 14.3 percent in 2022 to 821,000.

But in the first two months of this year, the registration rate was lower than in the same period last year.

It expects to open 12 gyms this year. This would fall short of the 28 locations it opened in 2022.

Energy costs this year are also expected to be around £10m higher than last year.

It’s been a mixed week for the bookmakers, but Ladbrokes spokeswoman Nicola McGeady says they ‘almost had our noses up front’ thanks to shock defeats to heavily supported Mighty Potter in the opening race and Shishkin in the Ryanair Chase.

With attention now focused on the Gold Cup, Ladbrokes owner Entain rose 1.6 percent, or 19.5 pence, to 1213.5 pence and Paddy Power parent Flutter rose 3.6 percent, or 480 pence, to 13,830 pence.

The pied piper Rentokil Initial was unstoppable after posting an annual profit increase of almost 28 per cent to £532m for 2022 and increasing its dividend by 18.2 per cent to a share of 7.55 per annum. Shares rose 10.1 percent, or 50.6 pence, to 553.6 pence.

M&G resolutely turned the other way as the asset manager continued its decline of recent days.

The stock, boosted by takeover speculation earlier this year, fell 8.4 percent, or 16.75 pence, to 181.65 pence.

There was little reason to cheer for former M&G parent company Prudential, which rose 1.3 percent, or 13.5 pence, to 1,049.5 pence, even as Barclays lowered its price target from 1,750 pence to 1,700 pence.

Electronics retailer Currys has cut its profit forecast for the second time in just over three months as trade troubles in Scandinavia continue to affect it.

The Nordic issues offset the pick-up in UK and Ireland trade and should push earnings sharply lower, at around £104m.

Shares fell 9.3 percent, or 6.65 pence, to 64.95 pence. Currys cut its outlook in December to between £100m and £125m for the year to April 2023, from the £125m to £145m it had expected. It made a profit of £186 million last year.

It was a similar story at furniture retailer DFS, which now expects full-year profits of £30m to £35m. That followed a slump in first-half profits by 70 percent to £6.8 million. Shares were flat at 133p.

Private equity group Bridgepoint, which owns Burger King in the UK and arts and crafts superstore Hobbycraft, rose 5 percent, or 10.2 pence, to 215.4 pence after assets under management hit a better-than-expected £33 billion.

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