The FTSE 100 edged higher on Wednesday as investors dipped their toes back into stocks heavily beaten down by the mini banking crisis over the past two weeks.
A speech by the Bank of England’s Governor this week, in which he said the recent saga is not another crisis on the scale seen in 2008, appears to have marked a turning point in sentiment.
The FTSE 100 was trading up 0.75% to 7,540 at the time of writing. US futures were pointing to a strong open this afternoon.
“The FTSE 100 made a solid start on Wednesday morning, continuing the cautious recovery for markets from the trauma of the collapse of SVB and forced union between Credit Suisse and UBS earlier this month,” said AJ Bell investment director Russ Mould.
Mould was also upbeat about the reappointment of Sergio Ermotti as UBS CEO after the takeover of Credit Suisse.
“Bringing in Sergio Ermotti as CEO – a key figure in UBS’ recovery from the Great Financial Crisis – to oversee the combination between Switzerland’s two biggest banks is a move likely to help salve market wounds.”
UBS shares have stymied losses since the Credit Suisse takeover – another factor which will help boost confidence. FTSE 100 banks Barclays, Natwest and Lloyds were all higher on Wednesday.
“With banking worries put on the back burner for now, with no further stresses in the system emerging, investors’ appetite for a bit more risk is returning,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Next
Next was the FTSE 100’s top faller on Wednesday. Despite a better than expected profit before tax of £870m for the year ending January 2023, the retailer said profit would fall to £795m in the year ahead.
“Sales and profit guidance for the year ahead has been maintained, with both expected to decline from the levels seen last year. The shares fell off the back of today’s announcement as the market woke up to the struggles ahead,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“Retail’s a tough sector to be in during an economic downturn, and continued inflation is expected to push costs up and impact sales. There’s plenty of challenges ahead for Next, reflected in the group’s valuation which is trading below the long-term average.”
Next share were down 5.5% at the time of writing.
Ocado was the FTSE 100’s top riser, gaining 6%, a day after the premium online retailer released disappointing figures for their most recent trading period.