FTSE 100 Live: FTSE closes at 7403 in major Credit Suisse rebound, Amazon lays off 9,000

FTSE 100 Live: FTSE closes at 7403 in major Credit Suisse rebound, Amazon lays off 9,000

London shares are under more pressure today as traders digest details of UBS’s emergency takeover of Credit Suisse.

The implications of the deal, particularly for bondholders, added to strain on banking stocks as the FTSE 100 initially fell more than 100 points.

The Bank of England, which is taking part in a coordinated move by central banks to improve dollar liquidity, said following the UBS deal that the UK banking system is “well capitalised and funded, and remains safe and sound”.

FTSE 100 Live Monday

  • Shares volatile after Credit Suisse rescue

  • Markets revise rate rise expectations

  • Bank of England begins dollar support

FTSE closes at 7403.85 after dramatic rally

16:39 , Daniel O'Boyle

The FTSE closed at 7403.85 today, rebounding dramatically after falling in the early morning.

The index of blue-chip companies fell as low as 7208 - a four-month low - but picked up as the day went on. It recovered its early losses soon after 10am before peaking as high as 7426.

Miners dominated the top risers for the day, with Anglo American, Antofagasta and Fresnillo the biggest gainers, all picking up more than 4%.

On the other hand, it was a tougher day for the financial sector, with Standard Chartered down 3.6% and Barclays down 2.6%.

FTSE rally continues as index gains 200 points in seven hours

15:51 , Daniel O'Boyle

The FTSE’s rally from four-month lows continued through the afternoon, with the index having now gained more than 200 points since 8:30 am.

The index of blue-chip shares is currently at 7423.37, up by 88 points for the day, despite losing 125 points within the first 20 minutes of trading.

Standard Chartered is the biggest loser of the day, with its share price down 2.8% to 616p, while Barclays shares are down 1.8% to 137p. However, shares in other banks including HSBC, Lloyds and Natwest ticked slightly up.

Amazon lays off another 9,000 employees as cost-cutting measures intensify

15:15 , Simon Hunt

Amazon is to let go of another 9,000 employees worldwide as the e-commerce giant ramps up its cost-cutting measures.

The announcement was made to employees of the firm in a note by CEO Andy Jassy, who said workers in the Amazon Web Services, human resources, advertising and Twitch units would be most impacted by the move, with the cuts taking place over a period of weeks.

It follows an earlier round of 18,000 layoffs announced in January, as well as the closure of a number of warehouses in the UK and an Amazon Fresh store in London. It is not clear how many UK jobs will be affected as part of the layoffs.

Read more here

Strong start for most US stocks, but First Republic under pressure

14:46 , Daniel O'Boyle

Major US stock indices are up so far today, but shares in regional lender First Republic continue to suffer substanial declines.

The S&P 500 is up 0.5% since opening, while the Dow Jones is up by 0.9%.

However, difficulties remain for First Republic Bank - which was the subject of a rescue package from top Wall Street banks last week - as its shares have fallen by another 15% to $18.

US stocks set to open higher

13:18 , Daniel O'Boyle

Shares in US companies are expected to open higher today, after a strong rebound from initial drops this morning in Europe.

According to futures markets, the Dow Jones Industrial index is expected to open up 0.3% to 32164, while the S&P 500 is set to gain 0.2% to 3955. The Nasdaq index, on the other hand, is projected to be flat at 12648.

US stock futures had been down as shares in London tumbled. However, they rose as the FTSE gained more than 150 points in the mid-morning.

While trading on the whole is strong, First Republic Bank’s dramatic slide continues, with futures trading at $19.04, below the level they traded at before reports of a rescue package from top Wall Street banks emerged.

Thousands of City jobs at risk in Credit Suisse crisis as UBS takes over embattled bank


Thousands of City jobs are at risk in the wake of the £2.5 billion rescue takeover of imploding Credit Suisse by arch rival UBS, analysts warned on Monday.

The emergency deal cobbled together on Sunday was supposed to restore confidence in markets worried about a re-run of the 2008 financial crash.

But markets remained febrile on Monday and banks including Credit Suisse in particular are highly likely to axe jobs.

Read more here

City watchdog slams vague sustainability benchmarks as it ramps up fight against ‘greenwashing’

12:41 , Daniel O'Boyle

The UK’s financial watchdog warned that it will fine rating providers that create overly vague sustainability targets, after finding that most of these benchmarks are of poor quality and could lead to ‘greenwashing’.

The Financial Conduct Authority completed a review of environmental, sustainability and governance (ESG) benchmarks, which companies use to showcase progress towards sustainability goals.

It said the overall quality of benchmarks it reviewed was “very poor”. In particular, it said that the methodologies for too many benchmarks were overly vague.

Read more here

Interest rate expectations torn up across the City into Bank of England meeting

12:26 , Michael Hunter

City analysts have begun a major about-turn on their expectations of central bank interest rate rises following the shockwaves rippling through the financial markets amid the rescue takeover of Credit Suisse.

Over 50% of investors now expect the Bank of England to swerve a further interest rate rise when members of its Monetary Policy Committee meet later this week, according to a Refinitiv poll – a huge jump from the roughly 10% who shared that view at the beginning of the month. Over 60% expect the US Federal Reserve to keep rates flat too.

Amit Patel, adviser at Welling-based mortgage broker at Trinity Finance, said: “The Bank of England must now vote to leave rates on hold or vote to decrease the base rate following the announcement that UBS will be buying Credit Suisse.

Read more here

City Comment: Everyone take a deep breath

11:10 , Simon English

Fifteen years ago last September the news was dominated by pictures of folk queuing around the block at Northern Rock branches to drag their money out before it went bust.

It won’t be anything like that this time. For a start, there are hardly any functioning bank branches left. About 10,000 of them close a year.

So one effect of the switch to digital, app-based banking, is it is now much harder to pay money into a bank, with a cheque, say. But it is much easier to get money out.

The swift execution of Silicon Valley Bank puts that in sharp focus.

As the FT pointed out, $42 billion was wired out of SVB in just a few hours last Thursday, as nervous folk clicked and moved.

One internet post that gets taken seriously can spark a stampede. It doesn’t matter if most people thought the bank was fundamentally sound. Enough people thought others would panic, so they panicked first.

If SVB clients had to go to a branch — a well-resourced, nice place with free coffee, in order to get money back — SVB would still be with us.

When Northern Rock went under, a run on a bank took days or weeks to unravel.

Now it takes an hour. Which explains why the takeover of Credit Suisse by UBS had to be agreed so quickly, and while markets were shut.

The banks closed branches in the name of efficiency. One wonders which of them is now regretting that.

For all that, banks in the UK are solid. They are in much, much better shape than they were back then. Regulators and governments have got smarter at dealing with potential bank collapses, if only out of practice, which means we can all keep agreeing that £20 is worth exactly £20 (adjusted for inflation, of course).

This isn’t like 2008. So long as everyone takes a deep breath

Banks stay under pressure as wider stock markets hold ground

10:51 , Michael Hunter

The index tracking major European banking stocks stayed under pressure, while wider share indexes fought back in volatile trade after another dramatic weekend rescue of a big-name financial company.

Nerves at UBS’s $3.3 billion (£2.7 billion) fire-sale deal to buy its arch-rival Credit Suisse were concentrated on the banking sector, with the Stoxx index tracking it down by around 3% at one stage of the morning, levels around which it looked stuck,

The wider cross-market and pan-European Stoxx 600 index, also lower earlier, fought back to rise overall, by about 0.3%.

Bank of England: UK banking sector remains "safe and sound”

10:42 , Daniel O'Boyle

The Bank of England has sought to ease fears about the UK banking sector, reassuring stakeholders that it “remains safe and sound”.

Shares in a number of London-listed banks fell today, following UBS’ acquisition of Credit Suisse and the subsequent writing off of a number of Credit Suisse’s tier 1 bonds.

However, the Bank said there was no cause for concern regarding UK banks.

“We welcome the comprehensive set of actions set out by the Swiss authorities today in order to support financial stability,” the Bank said. “We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.

“The UK banking system is well capitalised and funded, and remains safe and sound.”

Smurfit Kappa completes Russian exit

10:28 , Daniel O'Boyle

FTSE-1000 packaging business Smurfit Kappa has completed its exit from Russia, having sold its Russian operations to local management.

The business announced that it would leave the Russian market almost a year ago, following the country’s invasion of Ukraine. Having received local regulatory approval, the sale is now complete.

Smurfit Kappa’s Russian operations include bag-in-box facility and two corrugated plants in St Petersburg, and a corrugated plant in Moscow.

Smurfit Kappa shares are up 11p today to 2,838p.

Miners lead the FTSE 100, BP and Shell lower

10:21 , Graeme Evans

Endeavour Mining leads the FTSE 100 index after gold topped $2,000 an ounce for the first time in a year.

The gold spot price surged 6.5% last week and touched the landmark early today after the rescue of Credit Suisse failed to ease market jitters, leaving the yellow metal within sight of an all-time high of $2075 set in August 2020. It later settled at $1,986.

West Africa-focused Endeavour shares rose 6% or 109p to 1869p, having been 1624p less than a fortnight ago.

Silver miner Fresnillo also added 26.6p to 736.6p, while Egypt gold miner Centamin led the FTSE 250 with a gain of 6% or 6.6p to 107.25p

The risk-averse mood was also reflected in the price of Brent crude, which continued its descent towards $70 a barrel at a level last seen at the end of 2021.

The 3% slide for oil futures came amid heightened worries that the banking crisis will feed into weaker economic activity if consumers and businesses find it harder to borrow money. Brent crude later steadied to trade at $71.08 a barrel.

BP shares fell another 3.25p to 476.7p, having been above 550p prior to the start of the recent market turmoil, while Shell lost 1.5% or 33.5p to 2180.5p.

Their falls and the latest selling of financial stocks including Barclays and Prudential left the FTSE 100 index as low as 7206 before a recovery pushed the top flight into positive territory at 7339.52 for a rise of 4.12 points.

The defensive appeal of water companies Severn Trent and United Utilities left their shares 2% higher, while BAE Systems added 10.6p to 916.2p. Commodity trader Glencore also gained 5.7p to 438.35p thanks to UBS giving the blue-chip stock a “buy” recommendation.

The shares have fallen by about 25% from their January record high, but UBS said the balance sheet has never been stronger as it highlighted a price target of 560p.

Similar trends emerged in the FTSE 250 index, which recovered from an initial decline of 2% to settle 62.16 points lower at 18,408.67.

Big fallers included Tullow Oil and North Sea explorer Harbour Energy with declines of 8% and 5% respectively, while components manufacturer Essentra tumbled 30.2p to 183.2p.

Centrica partners Lhyfe for UK-first hydrogen project

10:07 , Daniel O'Boyle

British Gas owner Centrica and hydrogen production business Lhyfe have announced an agreement that they said will pave the way for the UK’s first green hydrogen production site.

The two energy firms will together explore collaboration on a pilot site in the Southern North Sea. They hope to use Centrica’s experience in gas storage and infrastructure to store hydrogen produced by Lhyfe in the UK and use it for energy generation.

“The end result would be proof that an end-to-end hydrogen production, storage, and distribution system is possible in the country,” the companies said.

Centrica and Lhyfe will also look into exploring hydrogen production at commercial scale alongside offshore wind.

Colin Brown, UK and Ireland country manager of Lhyfe, said the UK could become a leader in hydrogen energy.

“The UK can become a global leader in the production of renewable green hydrogen, moving away from our reliance on fossil fuels and improving our homegrown energy security, while delivering net zero and boosting local economies,” he said.

Bank of England rate hike expectations tumble after fallout from Credit Suisse

09:38 , Simon Hunt

City analysts have begun a major about-turn on their expectations of central bank interest rate rises following the shockwaves rippling through the financial markets amid the rescue takeover of Credit Suisse.

Over 50% of investors now expect the Bank of England to swerve a further interest rate rise when members of its Monetary Policy Committee meet later this week, according to a Refinitiv poll – a huge jump from the roughly 10% who shared that view at the beginning of the month. Over 60% expect the US Federal Reserve to keep rates flat too.

Amit Patel, adviser at Welling-based mortgage broker at Trinity Finance, said: "The Bank of England must now vote to leave rates on hold or vote to decrease the base rate following the announcement that UBS will be buying Credit Suisse.

“We need financial stability in the UK now more than ever and I think if they were to raise rates then this will catastrophically backfire.”

Just two of the Bank’s nine committee members voted against an interest rate rise when it last met in February.

Banking crisis adds to economic worries

08:35 , Graeme Evans

The speed of Credit Suisse’s demise, when it was previously deemed too big to fail, has rocked the banking sector. Today’s sell-off also reflects the implications for bond holders in banks after additional tier 1 bonds were valued at zero in the Credit Suisse deal.

Shares in Barclays and HSBC were among those under pressure, falling 7% and 5% respectively.

Susannah Streeter, head of markets at Hargreaves Lansdown, said: “It is not yet known exactly where more pain will emerge in the banking sector, but investors fear the problems are not yet over.”

She pointed out that bigger lenders have built up much bigger capital cushions since the financial crisis, have more stable deposits, and some are seeing greater inflows of cash as companies and individuals seek out safer havens to put their money.

“But as risk aversion grips the sector, the worry is that overall banks will become more cautious in their lending, which could be another blow for already fragile housing markets in particular. Worries are rattling investors about what repercussions a potential lending squeeze will have on the global economy.”

Gold price tops $2,000 amid safe haven rush

08:15 , Simon Hunt

The price of gold has reached its highest level in over a year as banking turmoil prompts a rush to safe havens.

The gold spot price has gained around $150 in the past week to top $2,000, nearing its all-time high $2074 in August 2020.

Bitcoin has also seen a boost, climbing around 15% over the past week to $28,430.

Banking stocks fall, Brent crude down to $71

08:09 , Graeme Evans

Financial markets remain under pressure despite the Credit Suisse rescue and support of central banks, with the FTSE 100 index 50 points lower at 7258.83 in the opening minutes.

Shares in Barclays, HSBC and Lloyds Banking Group shares were 3% lower, with stake-backed NatWest off 2%.

Brent crude stood at $71 a barrel, a fall of 3% in the session as worries grow over the demand outlook.

Bank of England poised to begin dollar swap lines

07:59 , Michael Hunter

Major central banks joined forces over the weekend to provide re-assurance to markets by setting up so-called dollar swap lines to ensure that access to the world’s reserve currency does not become problematic.

The dollar acts as a haven asset in times of acute market stress and alongside its role in settling a range of transactions, this can cause concern about supply.

The swap lines mean that banks have plenty of access to it.

They were established by the Bank of England, the Federal Reserve, the Swiss National Bank, the European Central Bank, the Bank of Canada and the Bank of Japan.

The Bank of England’s first such operation will run at 8.15 a.m. this morning.

Intertek CFO quits

07:58 , Daniel O'Boyle

Jonathan Timmins has stepped down as CFO of FTSE-100 quality assurance business Intertek with immediate effect.

The business announced its financial results last month, narrowly missing profit forecasts, and its shares have fallen by 11.5% in the past month,

He will be replaced by Colm Deasy, who previously served as TT, B&C and People Assurance.

Central banks step in, interest rate decisions awaited

07:52 , Graeme Evans

Central banks have increased the frequency of their US dollar swap operations in an effort to improve liquidity and ensure that financial conditions don’t over tighten.

The move comes as policymakers in the UK and United States prepare to consider whether to make further increases in interest rates.

Further rate rises at meetings scheduled for this week were seen as a nailed-on certainty just over a week ago, but now markets are increasingly betting on the two central banks making no change to policy.

Michael Hewson, chief market analyst at CMC Markets, said: “As a result of some significant financial contagion caused by poor risk management practices at a number of small US tech lenders, and a loss of confidence in Credit Suisse after a major shareholder ruled out putting in more capital, we could well find that we’re at or close to a rate hike peak.

“That doesn’t mean rates will come down quickly however, it just means that rates could stay at highly elevated levels for a long time to come in the hope that inflation will eventually return to target over a much longer period of time.”

FTSE 100 seen lower after Credit Suisse deal

07:23 , Graeme Evans

Stock market volatility looks set to continue in the aftermath of the £2.7 billion deal that has seen UBS take on rival Credit Suisse in a move backed by Swiss authorities.

The FTSE 100 index, which fell more than 5% during its worst week since Russia’s invasion of Ukraine, is expected by IG Index to decline by 1.2% or more than 90 points to 7241.

It comes after banking stocks dropped on Asian markets as traders considered the implications of the Credit Suisse deal, particularly the decision to write off certain bonds.

Meanwhile, major central banks including the Bank of England have taken steps to enhance the provision of liquidity. Seven-day maturity US dollar swap lines between the Federal Reserve and the other central banks will be increased from a weekly to a daily basis.

Recap: Last week’s top stories

06:50 , Simon Hunt

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

  1. UBS has agreed to buy Credit Suisse in a rescue deal described as “one of great breadth for the stability of international finance.”

  2. The Bank of England last night said it would take coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.

  3. The UK economy is set to deliver the worst performance of any advanced country this year.

  4. Thousands of well-off Londoners were handed a big pension tax break under plans set out in Jeremy Hunt’s Budget.