Global banks enjoyed the reassurance of a Credit Suisse funding deal on Thursday after the stricken institution said they had secured a $54bn funding line with the Swiss central bank.
The FTSE 100’s rout subsided on Thursday as the index opened up sharply and traded as high as 7,458. As the session progressed, the gains dwindled and the index was trading up just 0.1% shortly after the ECB announced a 50bps hike on Thursday.
Credit Suisse’s new funding options drove a rally across Europe as the German DAX rose 0.1% and French CAC surged 0.5%.
“One minute the market is worried about a banking crisis, the next minute it is more relaxed. This hot/cold mentality creates an odd atmosphere and today we have another one of those days where investors are seemingly less worried. How long this situation lasts is another matter,” said Russ Mould, investment director at AJ Bell.
“News that the Swiss National Bank would step in and lend Credit Suisse up to 50 billion Swiss francs was the catalyst for investors to breathe a sigh of relief.”
“However, we are nowhere near safe territory for the markets. It would only take another piece of bad news from the banking sector anywhere in the world to put investors on edge again.”
Underlying concern in markets was evident in the regional US banks as First Republic Bank traded down 35% on reports the bank was exploring a sale following downgrades by ratings agencies.
Nonetheless, the FTSE 100’s most heavily hits banks provided some reprieve from the selling on Thursday. Barclays edged 1.7% higher and Standard Chartered opened higher before the gains evaporated to trade marginally lower. Standard Chartered is down 17% over the past five trading sessions.
Rentokil Initial
With attention remaining firmly on global banking stocks and the ECB’s rate decision, Rentokil Initial’s bumper revenue jump was somewhat overlooked.
The pest control and hygiene company’s Adjusted EBITDA rose 27% as it began the integration of their recent Terminix acquisition.
