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MARKET REPORT: Roller-coaster ride for investors as ECB hikes interest rate


MARKET REPORT: Roller-coaster ride for investors as ECB hikes interest rate

Investors endured another rollercoaster ride yesterday amid concerns about the banking sector and wider economy.

The FTSE 100 raced higher in early trading – rising 118 points or 1.6 per cent – in a relief rally sparked by a £45billion lifeline for troubled Swiss bank Credit Suisse.

But London’s blue-chip share index slipped back after the European Central Bank (ECB) pressed ahead with a bumper hike in interest rates despite the turmoil.

Bumper hike: Many observers thought the ECB would raise rates by just 0.25 percentage points, from 2.5% to 2.75%, But it was unbowed, raising rates by 0.5 percentage points to 3%

Many observers thought the ECB would raise rates by just 0.25 percentage points, from 2.5 per cent to 2.75 per cent, given the strain the hikes are putting on the financial markets and banking system.

But it was unbowed, raising rates 0.5 percentage points to 3 per cent, as it had suggested it would before the chaos of the past week.

With investors struggling to take it all in, the FTSE 100 finally closed up 0.9 per cent, or 65.58 points, at 7410.03 while the FTSE 250 climbed 0.7 per cent, or 132.73 points, to 18,758.58. 

The moves were echoed across Europe with major benchmarks in Paris, Frankfurt and Milan whipsawing.

All eyes will now be on the US Federal Reserve and Bank of England when they make their latest interest rate decisions next week.

Just as the stock markets yo-yoed throughout the day, so did the oil price, diving towards $70 a barrel before recovering to stand around $74. BP fell 0.9 per cent, or 4.35p, to 482.45p and Shell was down 2.2 per cent, or 50.5p, to 2209p.

The country’s bookmakers will today enjoy the biggest betting day of the year bar the Grand National as punters gamble on the Cheltenham Gold Cup.

Stock Watch – Gym Group

Gym Group tumbled 14.4 per cent, or 17p, to 101p after it warned of a tough year ahead.

The company, which owns 230 gyms, said memberships rose 14.3 per cent to 821,000 in 2022.

But in the first two months of this year, the sign-up rate was slower than in the same period last year.

It expects to open 12 gyms this year. This would fall short of the 28 sites it opened in 2022. 

Energy costs are also expected to be around £10million higher this year compared to last year.

It’s been a mixed week for the bookies, but Ladbrokes spokeswoman Nicola McGeady says they ‘just about got our noses in front’ thanks to shock defeats for the heavily backed Mighty Potter in the opening race and Shishkin in the Ryanair Chase.

With attention now turning to the Gold Cup, Ladbrokes owner Entain rose 1.6 per cent, or 19.5p, to 1213.5p and Paddy Power parent Flutter was up by 3.6 per cent, or 480p, to 13,830p.

There was no stopping rat catcher Rentokil Initial after it posted a near-28 per cent rise in annual profits to £532million for 2022 and hiked its dividend 18.2 per cent to 7.55p a share. Shares rocketed 10.1 per cent, or 50.6p, to 553.6p.

Heading firmly in the opposite direction was M&G as the asset manager continued its decline of recent days.

The stock, driven up by takeover speculation earlier this year, fell 8.4 per cent, or 16.75p, to 181.65p.

There was little to cheer for the former M&G parent company Prudential, which rose by 1.3 per cent, or 13.5p, to 1049.5p even though Barclays cut its target price to 1700p from 1750p.

Electronics retail chain Currys has trimmed its profit guidance for the second time in just over three months, as trading woes in Scandinavia continue to affect it.

Its Nordic troubles were offsetting strengthening trading in the UK and Ireland and set to leave profits sharply lower, at around £104million. 

Shares fell 9.3 per cent, or 6.65p, to 64.95p. Currys downgraded its outlook in December to between £100million and £125million for the year to April 2023, from the £125million to £145million it had expected. It made £186million profit the previous year.

It was a similar story at furniture seller DFS, which now expects profits of £30million to £35million for the full year. That followed a 70 per cent slump in first-half profit to £6.8million. Its shares were flat at 133p.

Private equity group Bridgepoint, which owns Burger King in the UK and arts and crafts superstore Hobbycraft, rose 5 per cent, or 10.2p, to 215.4p after assets under management hit a better-than-expected £33billion.

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