The FTSE 100 had a roaring start to Tuesday’s session following comments by Bank of England Governor Andrew Bailey suggesting rates hikes could soon come to an end, and said the current banking crisis was not like the 2008 financial crisis.

The FTSE 100 traded as high as 7,520 in early trade on Tuesday, but fell back to trade dead flat by midday.

Early optimism saw another jump in banking shares. Barclays traded above 140p before falling back to trade negatively, Natwest shares also gave up all of their early gains.

“It’s all about confidence right now – and anything which reassures shareholders, creditors and depositors that their money is safe with the banks is one step further away from the carnage which claimed SVB and Credit Suisse,” said AJ Bell investment director Russ Mould.

The confidence Mould alludes to appears to be fragile. Traders selling early strength suggests markets are conscious the current crisis is not yet completely over.

Diageo CEO steps down

After a 10-year stint as CEO of Diageo, Sir Ivan Menezes will step down and be replaced by Debra Crew. Diageo shares fell on Tuesday.

“The market reaction, with a mere 0.5% decline in the share price, shows that investors aren’t worried about big changes to the business. Instead, this looks like as smooth a transition as an athlete passing the baton in a sprint relay,” said Russ Mould.

Analysts highlighted the precarious role for the new CEO with Diageo shares trading above 20x earnings.

“Growth is expected to slow in the short-term however, and an earnings multiple of about 20x means Debra Crew will be under extra pressure to perform,” commented Derren Nathan, Head of Equity Research at Hargreaves Lansdown.

Ocado

Ocado shares were the FTSE 100’s top faller after the company released an update on their Ocado retail partnership with Marks & Spencer. Revenue, customer numbers and orders per week were all higher, but investors were apparently unhappy with the lower average basket size and shares fell over 5%.

“Ocado’s retail arm is in a difficult position. While the cost-of-living crisis rumbles on, being a more premium name in the sector comes with immediate challenges,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“However, the group seems to be doing well with the tools at its disposal. Although the number of items people are buying per-shop is dropping, which is to be expected as post-Covid shopping habits normalise, this is being successfully offset by higher prices.”

Diageo shares slipped on Tuesday after the global drinks giant announced CEO Sir Ivan Menezes will step down and replaced by Debra Crew.

Sir Ivan Menezes has been in charge of Diageo since July 2013 and shareholder disappointment on Tuesday is understandable.

During his tenure, the Diageo share price has nearly doubled and is firmly established as one of the world’s largest alcohol companies by market cap.

“A change at the top is always a leap into the unknown, although slightly less so when the incumbent is already part of the team. Diageo is the sixth largest company on the FTSE 100, and the new captain is unlikely to be given much of a honeymoon period by shareholders,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.

“Sir Ivan will be a tough act to follow. Diageo now sells over 200 drinks brands across 180 markets, and is a category leader in many of its spirits categories. And on a fitting note for his departure, its flagship Guinness brand has become the number one beer sold in pubs in the UK.”

“Growth is expected to slow in the short-term however, and an earnings multiple of about 20x means Debra Crew will be under extra pressure to perform.”

Diageo shares are down 2.7% year-to-date and has a 2.1% yield.

The FTSE 100 gained on Monday after fears about the global financial system eased and investors stepped in to pick up beaten down stocks.

The FTSE 100 was nearly 1% higher at 7,476 at the time of writing, while the German DAX added 1.2%. A sharp rally in Deutsche Bank shares helped lift the mood in Europe.

“Bargain hunters were out in force for Europe’s banks following the chaos of the past few weeks. Deutsche Bank jumped more than 4% in early trading, regaining some of the territory lost last week when its share price plummeted,” said Russ Mould, investment director at AJ Bell.

Although Deutsche Bank shares found some support, the cost of insuring against the bank defaulting on their bonds still remained high. Deutsche Bank Credit Default Swaps (CDS) will be closely watched in the coming days and further increases could spark another wave of volatility.

In addition to stability in Deutsche Bank’s equity, news First Citizens Bank had acquired SVB assets instilled a sense the crisis was past its worst.

“Helping to repair sentiment towards the sector was the news that First Citizens Bank is to buy $72 billion of Silicon Valley Bank assets at a discount of $16.5 billion. Together with HSBC’s purchase of SVB’s UK operations and UBS’ takeover of Credit Suisse, investors will be hoping for some stability from now on in the broader sector,” said Russ Mould.

The positive developments at SVB and Deutsche Bank spilled over into the FTSE 100’s banks with Barclays, Natwest and Lloyds gaining on the day. Standard Chartered was still feeling the heat and trading in negative territory.

The gains elsewhere in the index were broad; 89 of the FTSE 100’s constituents were trading in positive territory at the time of writing.

Some good news from the Calgary, Alberta-based Canadian Overseas Petroleum (LON:COPL) has just been announced.

From a combination of the group’s main bondholder, institutional shareholders, and new investors the company has completed its $14.8m Convertible Financing.

In the process the group issued 70.3m new warrants, while in tandem it settled off another $2.2m of debt to various creditors by issuing 26.84m new shares at a premium to the current market price.

Its interests

The £20m capitalised group is engaged in the exploration, appraisal, development and production of oil and gas assets with producing assets and reserves principally in the Converse and Natrona Counties in the US state of Wyoming, where it is the operator and majority working interest owner of three oil producing units.

The company also has interests in sub-Saharan Africa through its ShoreCan joint venture in Essar Nigeria, as well as independent interests in other countries.

The ‘game changer’

Last December the group declared a ‘game changer’ at its Frontier 1 oil reservoir in Wyoming. Oil production started in January before severe winter storms impacted to slow operations.

Referring to the financing President and CEO Arthur Millholland stated that:

“This is an important raise for COPL. 

After some bumpy months operationally, and in our refinancing negotiations, this raise supports the company to an intended RBL and for the capital investment required to achieve a material production uplift.

We appreciate the support of our leading investors and are excited about the deployment of this capital.”

The group’s shares improved to 5.32p on the news.

Nuformix, the fibrosis and oncology drug repurposing company, have released positive results from their NXP002 study and outlined the next steps in the development of the treament.

NXP002 is being developed as an inhaled treatment for Idiopathic Pulmonary Fibrosis. The most recent study utilising a human IPF lung tissue model found NXP002 to be non-toxic while producing a strong anti-fibrotic effect.

With the possibility NXP002 targets different disease pathways to existing standards of care, the findings of the study also suggests NXP002 could be used in addition to existing treatments to enhance an anti-fibrotic effect.

Nuformix’s next steps include additional studies on donor lung tissue and the further evaluation of current results to identify disease pathways.

“All parties are delighted with the results from this study, which are as good as we could have hoped for and are the first results from what is the most advanced iteration of this ‘close to patient’ IPF disease model to date,” said Dr Dan Gooding, Executive Director of Nuformix.

“The reduced variability in the resulting data allows us to have high confidence in both NXP002’s anti-fibrotic activity alone, but also in the added anti-fibrotic performance it can deliver on top of existing standards of care.  Additivity to standard of care is the most important aspect because it’s the simplest option to investigate in a clinical study and is therefore fast becoming a top priority for potential licensing partners.”

“Having seen the quality of these results, our aim now is to generate datasets from three donors in both human IPF and healthy lung duration of action studies.  These data can be generated quickly and will be essential in opening up new discussions with potential licensing partners and support overall progression of the NXP002 programme.”