As we head towards the end of a tumultuous week for global equities, the FTSE 100 resumed the move to the downside despite volatility subsiding in early trade across Europe.

The FTSE 100 was down round 0.5% at the time of writing on Friday after giving up early gains.

European stocks opened higher after US banks moved to stabilise regional US bank First Republic overnight. The move follows efforts by the Swiss central bank to support Credit Suisse with access to $54 billion.

“Whether the efforts on the part of the Swiss government to prop up the bank prove sufficient, whether Wall Street’s injection into troubled regional institution First Republic overnight works, and whether there are any other vulnerable banks are likely to remain key considerations for investors. The dreaded c-word, contagion, certainly remains in the air,” said AJ Bell investment director Russ Mould.

Although the shares of both First Republic and Credit Suisse were again trading negatively on Friday, the declines were more moderate than the swings we saw earlier in the week. Credit Suisse was down 11% at the time of writing.

Around midday on Friday, SVB announced they were filing for bankruptcy in the US and sparked a fresh wave of selling.

The FTSE 100’s banks were down marginally. Barclays and Lloyds were both down around 0.5%. Standard Chartered was off 0.8%.

Investors will be looking forward to the weekend after a week of uncertainty and volatility, but will have to be prepared for another potentially choppy week next week as the Federal Reserve meets to set the next change in interest rates.

US rates

The collapse of SVB and fears about Credit Suisse overshadowed the interest rates concerns this week, but make no mistake, whether the Federal Reserve hikes 25bps or 50bps, and their comments on the trajectory of rates, promises dramatic moves in equities and the bond market next week.

Indeed, the troubles in US regional banks and Credit Suisse are a result of the tightening cycle.

“The pace and scale of the rate tightening cycle after a decade of virtually zero interest rates was always likely to reveal stresses and strains in the financial system but if central banks row back, they risk leaving inflation even more entrenched and fostering a sense of panic,” said Russ Mould.

The Federal Reserve are stuck between a rock and a hard place.

They need to bring high inflation rates under control, but risk further instability with further rate hikes. A 50bps hike is warranted given US CPI is still at 6%.

However, there is an argument the disruption in the banking system this week may act to tighten financial conditions and do the Fed’s job for them.

A 25bps hike may suggest the Fed is concerned about financial stability and unleash a fresh wave of concern.

Today’s more benign trade in equities could well be the quiet before a new storm.

The FTSE 100’s more defensive nature may see the index provide a refuge and lead to outperformance compared to US indices, should we experience Fed-induced volatility.

Tekcapital shares jumped on Friday after the university technology company released an update on their portfolio company Guident.

Guident is an autonomous vehicle (AV) safety company at the forefront of ensuring AV compliance with safety regulations. Guident has developed a Remote Monitoring and Control Center (RMCC) solution that facilitates human involvement in safety procedures for driverless vehicles.

Guident’s summary of recent activity saw Tekcapital share price perk up 5% to 15.75p in early trade as investors digested the progress and commercial opportunity for their technology.

Guident has established agreements with the Boca Raton technology campus and Jacksonville Transportation Authority which are to be finalised shortly and see Guident’s RMCC’s deployed and generating Guident revenue.

A letters of intent has been signed with Auve Tech, a developer and manufacturer of autonomous transportation systems. The relationship could see Guident’s technology in Auve Tech products and supply to clients across US, Europe, and Asia.

Shock Absorbers

In addition to their AV safety systems, Guident are developing the Regenerative Shock Absorber which harnesses the natural energy subjected to shock absorbers and converts this energy back into power for electric vehicles. This improves EV power efficiencies and reduces the resources used to complete a journey.

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.

Following the latest Update from Greatland Gold (LON:GGP) concerning its exploration and development progress at its Havieron Project, Canaccord Genuity has maintained its Speculative Buy rating on the £369m capitalised company’s shares.

Their analyst Alexander Bedwany has a Target Price of 20p a share, compared to the 7.15p market price.

The flagship gold-copper project located in the Paterson Province in Western Australia is a Joint Venture with Australia’s leading gold producer Newcrest Mining – with Greatland having a 30% interest.

MD Shaun Day, who has recently been hosting a number of investor presentations on the group’s European Roadshow, stated that:

“The Havieron team continues to deliver strong results at the project. Total development has now surpassed 1,850m and pleasingly, decline development is continuing ahead of the current schedule.

Our most recent drilling activities highlight the potential of high grade mineralisation outside the Southeast Crescent which could add significant value to the mine plan at Havieron with additional gold and copper mineralisation intersected at the Northern and Eastern Breccia zones.”

Drilling Update

Improved geotechnical conditions have enabled increased productivity resulting in development outperforming the current schedule by 10%.

The main decline continues to progress ahead of the current schedule having surpassed 1,520m.  Decline support excavations for ventilation, services and materials handling takes the total development to over 1,850m.

The total advance is 10% ahead of the current schedule due to improved geotechnical conditions and the ongoing focus on productivity improvements.

Drilling activities at Havieron recommenced at the beginning of February 2023 with three drill rigs onsite and four holes completed for a total of 5,214m. This most recent drilling takes the total drilling at the project to 331 holes for 293,878m.

The drilling confirms the presence of high-grade gold and copper mineralisation outside the current Mineral Resource with recent results including:

– Northern Breccia: 29.9m @ 3.9g/t Au and 0.01% Cu from 945.1m

– Eastern Breccia: 57m @ 2.1g/t Au and 0.19% Cu from 1,262m

Analyst Opinion – more gold on the way

Canaccord Genuity has the view that the continued release of high-grade results suggests that a significant resource increase is likely later this year.

It also notes that no deal has, as yet, been agreed for GGP to sell off its Havieron stake to Newcrest Mining, the latter currently being bid for by Newmont.

Conclusion – cheap Aussie gold buy?

The shares, at 7.15p,  have hardly responded to the good news, leaving investors with an attractive buying opportunity if they wish to play in the Australian gold scene.

Halma shares were creeping higher on Thursday after the life-saving technology group said group adjusted profit before tax will be in line with market expectations.

In 2022 FY, Halma’s adjusted profit before tax grew to £316.2m and this years expectations of £353.1m to £369.6m would represent the 20th year of growth.

The company has achieved another year of profit growth through acquisitions and building organic growth momentum across all geographies.

“Today’s update was yet another reassuring statement from Halma who is on track to deliver its 20^th year in a row of record profits. It’s also been a record year for investment in M&A, committing to a deal spend of up to £264m. We think the challenging macro environment will present further opportunities for Halma to pick up complementary businesses at attractive prices,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.

“Halma continues to prove the resilience of its sectors, and with order intake ahead of last year, next year is also beginning to shape up nicely.”

Nathan continued to explain how the recent selloff has tarred all companies with the same brush and suggested Halma’s declines were unjustified. He did, however, caution that the PE ratio was a little rich.

“The shares have not escaped the recent sell off in the FTSE 100, and that’s perhaps a little unjustified. Nevertheless, a mid-twenties earnings multiple is hardly bargain basement territory. Halma has earnt it’s market admiration through relentless delivery of earnings growth. With that in mind, it’s fair to say that Marc Ronchetti has some big shoes to fill when he takes the helm next month,” said Derren Nathan.