FTSE 100 Live: Credit Suisse lifeline eases banking crisis fears

Rentokil Initial leads FTSE 100 recovery, Currys down 4%

Rentokil Initial led the FTSE 100 index today as the rat catcher gave investors a reminder of its appeal as a stock for uncertain times.

Shares jumped 7% or 33.6p to 536.6p, driven by a 28% rise in annual profits to £532 million and “excellent early progress” on Rentokil’s transformational purchase of US operator Terminix.

The deal, which reinforced Rentokil’s place as the world’s largest pest control company, is now set to deliver larger than expected cost synergies and today contributed to Rentokil raising its medium-term revenues growth target to at least 5%.

Wealth Club head of equities Charlie Huggins said the pest control-to-hygiene services company was better placed than most to weather an economic downturn.

He added: “Rats need dealing with, no matter what’s happening to inflation or the economy. Add this to a large slug of recurring revenue from long term contracts and it adds up to a resilient business with decent pricing power.”

Today’s improvement means Rentokil’s shares are in positive territory for the year, having been impacted by worries over the risks of the Terminix deal struck in 2021.

It was joined at the top of the blue-chip risers board by gains of around 3% for banking stocks including Barclays and Lloyds as sentiment in the sector steadied after yesterday’s pummelling.

The FTSE 100 index improved 0.7% or 50.30 points to 7394.75, while the FTSE 250 index lifted 36.20 points to 18,662.05.

Retail stocks came under pressure, with electricals chain Currys down 4% or 2.65p to 68.95p after it said conditions in the Nordics remain very challenging as it grapples with high cost inflation and “unrelenting competitive intensity”.

Full-year profits of £104 million will now be at the lower end of its previous £100 million to £125 million guidance, but Currys said it is taking decisive action through the appointment of a new chief executive to run the Nordics business.

Among other consumer-focused stocks in the FTSE 250, Dunelm fell 3% or 44p to 1129p and Moonpig dropped 3.5p to 115.4p.

Prax Group to acquire oil field operator Hurricane in £249 million deal

Prax Exploration & Production has agreed to acquire oil exploration company Hurricane Energy for as much as £249 million.

Prax will pay 4.15p per Hurricane share up front, plus a supplementary payment of 1.87p per share and a contingent consideration of up to 6.48p per share.

At full price, the deal would be an 84% premium from Hurricane’s share price at the close of trading on 1 November, before it announced details of a possible sale.

“I am pleased by the outcome of what has been a thorough and exhaustive formal sale process,” Hurricane chairman Philip Wolfe said.

“The Hurricane board believes that the acquisition will deliver more cash than Hurricane shareholders are likely to have received from Hurricane’s Lancaster oil field, on a much expedited timeframe, as well as mitigating the risks associated with production from a single well development.”

Pain and no gain for Gym Group after uneven start to 2023

Shares in the Gym Group sunk 15% to 99p this morning after the low-cost operator sounded the alarm on an “uneven start” to 2023, warning that future revenue increases would be offset by cost increases.

The firm posted a loss of £19.3 million for 2022 — lower than the £35.4 million loss it suffered the previous year but well behind the £14 million profit it made in its last full trading year before the pandemic.

Gym Group Chair John Treharne said: “We hoped 2022 would see a return to a more normal trading environment.

“It is now clear that it will take a longer time to return to pre Covid-19 levels as a result of both the changes to customers’ everyday lives and the macroeconomic headwinds that we are all facing.”

The stock is down 45% over the past year.

The company had a record 28 new gym openings in 2022, but said it would take “a more measured approach” to new openings in 2023.

DFS aims to cut costs are profit tumbles amid lower H1 margins

DFS is looking to cut costs across “the full spectrum” of its cost base, after profits were down by 70% in the first half of its financial year.

In the year to 25 December, revenue was down by 2.2% year-on-year to £544.5 million, but costs increased, causing profits to tumble to £7.1 million.

In response, the business said it had a plan to bring margins back up and was “reviewing the full spectrum” of its cost base.

The results came amid a decline in the wider furniture market, with DFS gaining market share from its competitors.

The group also revised its full-year profit guidance downwards, to between £30 million and £35 million.

DFS shares are down 5p to 128p.

Credit Suisse lifeline helps shares rally

Credit Suisse shares have rebounded 24%, ending a run of eight consecutive sessions in the red that culminated in yesterday’s 24% slide to a record low.

European stock markets are also 1% higher after Switzerland’s central bank shored up confidence with its offer of support for Credit Suisse. It added that capital and liquidity levels at the lender were adequate for a systemically important bank.

Capital Economics said markets will be looking to see whether concerns shift from Credit Suisse to other parts of the financial sector.

Its chief economist Neil Shearing said: “The problems at Credit Suisse are very different to those that brought down SVB a few days ago. But they serve as a reminder that as interest rates rise, vulnerabilities are lurking in the financial system.

“Key areas to monitor are smaller European banks and shadow banks, particularly open-ended funds that might suffer from maturity mismatches.”

FTSE 100 opens higher, Barclays recovers after 9% fall

The FTSE 100 index has opened 98.94 points or 1.35% higher at 7443.39 after the intervention by Switzerland’s central bank helped calm Credit Suisse fears.

Among London shares, Barclays shares rose 4% or 5.4p to 143.6p after losing 9% yesterday. Shell also steadied following yesterday’s big fall, adding 25.5p to 2285p.

The FTSE 100 index fell 3.8% amid the Credit Suisse turmoil and is down 8% since topping 8000 for the first time last month.

Currys appoints new chief to warm up its Nordic business as problems there linger

The UK’s biggest electronics retailer has appointed a new regional chief for its troubled Nordic business as it moves to turn the unit around amid heavy competition from rivals there.

Currys said Fredrik Tønnesen will step up from chief operating officer to take over from Erik Sønsterud, who is stepping down as regional CEO “with immediate effect”.

Heavy discounting on pricing in Sweden, Denmark and Norway came in part as local rivals there sold off excess stock as they withdrew from Russian markets. Currys previously described the discounting as “desperate and said it “crashed pricing” across the market, which meant “nobody was much, if any, money”. 

Today, it said the Nordics performance was “weaker” and “remains very challenging” in a “tough consumer environment”, with “high cost inflation and unrelenting competitive intensity.” But it added that “decisive action” was “underway”.

Currys stood by its group profit guidance for the year, saying it would be “broadly in line” with consensus forecasts of £104 million, albeit at the lower end of the previously guided range of £100 million to £125 million.”

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FTSE 100 seen higher, focus on ECB rates decision

London’s FTSE 100 index is expected to recoup some of yesterday’s heavy losses, with IG index futures seeing a 0.9% rise to about 7400.

The Credit Suisse crisis and resulting impact on commodity prices meant the FTSE 100 was hit hard yesterday, given its weighting towards financial and resources stocks.

The top flight fell 3.8% in its worst session since Russia’s invasion of Ukraine, with the likes of Shell and Anglo American down 8% and Barclays off 9%.

The S&P 500 index fell by more than 2% at one point but recovered to finish 0.7% lower amid speculation of limited US banking exposure to Credit Suisse.

Wall Street futures are pointing to a flat session today as traders continue to revisit their expectations on what the events of the past week will mean for interest rates.

The immediate focus is on today’s meeting of the European Central Bank and whether policymakers stick with their pre-announced plan to raise the deposit rate from 2.5% to 3% or put the rise on hold.

The John Lewis Partnership plunged to a loss of £234 million for the year, and said it could not afford to pay staff their traditional bonus.

Sharon White, the chairman, said it had been a “tough” time.

She insists the balance sheet remains strong, with £1 billion of cash on hand, but there is no doubt there are concerns about the future of what has often been regarded as the best retailer in Britain.

Sales for the year fell by 2% to £12.25 billion overall and were down 3% at Waitrose.

The grocer attracted more customers, “but they bought less” said White.

She is trying to transform the group and admits that some of the group’s problems are self-inflicted.

“It is also the case that we had some set-backs. Product supply challenges and a major fire in our Brinklow warehouse hit availability in Waitrose last summer. This was recovered through autumn and availability is now strong,” she said.

The loss came from poorer trading and a write down in the value of Waitrose stores.

Staff bonuses have been a celebrated part of working for the Partnership. In the good years they were as high as 17% of salary.

Bank of England Governor Andrew Bailey monitoring Credit Suisse crisis “very closely”

Bank of England governor Andrew Bailey is following the Credit Suisse crisis “very closely” but news of a huge intervention by the Swiss central bank was “encouraging,” Jeremy Hunt said on Thursday.

The Chancellor was keen not to say too much publicly on the situation facing the large European bank.

Asked if he was worried about the risk of contagion to British banks he told Sky News: “Chancellors never comment on what is happening in the markets.

“Obviously, I’m following the situation, the Governor of the Bank of England is following it very closely.

“The news we have heard from the Swiss authorities this morning is encouraging but I won’t say any more than that.”

Last night Credit Suisse said it intends to borrow 50 billion Swiss francs from the central bank to shore up its liquidity.