📈 Bouncebackability

Good morning. In today's update - Markets staged a dramatic rebound following heavy early losses, the BoE gave their blessing to the UBS/Credit Suisse deal, UK house prices stabilised, a potential end to rail strikes is in sight and a promising eco-friendly delivery company raised funding.

Markets

UK equities navigated a tricky opening to the trading day following the announcement of the UBS/Credit Suisse deal over the weekend. Stocks dropped sharply in the morning, with the FTSE 100 falling as much as -1% before rebounding across the afternoon to finish +0.9% ahead. Sentiment across global markets was most evident in Swiss-listed UBS, which dropped to -15.4% in the morning before a dramatic recovery to finish +1.3% higher.

Whilst UK banks clawed back some early losses, most ended the day lower – Barclays (-2.3%), Standard Chartered (-3%), Lloyds (-0.3%), HSBC (-0.1%).

Outside of financial stocks, miners performed well after the recent banking turmoil caused markets to flee to safe assets, causing a surge in precious metals. FTSE 100 miner Endeavour Mining closed +4% higher.

Top Stories

👏 BoE cheers UBS/Credit Suisse deal; claims UK banks are solid

The Bank of England “welcomed” moves by the Swiss National Bank to organise the deal between UBS and Credit Suisse over the weekend, adding they supported approval of the deal on the grounds of financial stability. The announcement also made the point of noting the UK banking system is “well capitalised and funded” – an attempt at squashing fears that any contagion would spread to our shores.

Separately, the BoE also clarified the hierarchy of losses in the event of bank failure. Holders of Credit Suisse’s AT1 bonds (bonds that are typically converted to equity when a bank runs into trouble) are furious the value of their holdings have been completely wiped out, despite equity holders receiving (some) compensation. Per Reuters:

Therefore, the BoE clarification should hopefully put to bed any fears that they would follow the same route should a UK-based bank fall into difficulties. (BoE Official)

🏠 Bright spots in UK housing market

A Rightmove report released on Monday showed house prices had steadied somewhat in March. The data showed the average price for newly-listed houses rose 3% in the year to mid-March, despite higher mortgage rates and an uncertain economic outlook. Rightmove were hesitant to get overly excited – the increase in prices between February to March of this year (+0.8%) was the lowest in 20 years. (Official)

🚆 End to rail strikes in sight?

Network Rail staff – those who operate the railway tracks as opposed to the trains themselves – have accepted a revised pay offer from the Government. The deal sees staff salaries increase by a minimum of 9.2%, and up to 14.4% for the lowest paid. No deal is in place for the workers of the train companies themselves yet, with further strikes expected on 30 March and 1 April.

🛵 On ya bike – Zedify raises £5m

Electric cargo bike start up Zedify has scored a £5m investment, co-led by Barclays and listed fund manager Mercia Asset Management. Founded in Cambridge, Zedify’s bikes are an eco-friendly last mile delivery option for businesses across the city. The funding has been earmarked to expand into new locations across the country, including Manchester and Birmingham. The expansion should generate 120 jobs in the process, noteworthy given all Zedify’s delivery drivers are employed (unlike other some ride-hailing/delivery services). The £5m raise builds on Zedify’s £1.2m seed round in January last year.

What Else Happened?

Economics / Politics / General

Expectations of an interest rate rise have been slashed to around 50% following volatility in the banking sector; MPC meet on Thursday

Heavily-moaned-at train operator Avanti West has been given a 6 month extension to contract, despite consistent failings

An industry survey showed British manufacturing output increased in the first quarter of 2023; firms are still cautious on inflation

Deals

Patch, the shared coworking space encouraging people to “Work Near Home”, raised £3m to expand locations across the country

Government investment vehicle, Future Fund, has invested in Harvest London – an indoor Farming facility based in Walthamstow that grows over 100 different crops

Company Updates

Retailer John Lewis is considering selling a minority stake in the business to “help fund transformation”, likely signalling the end of its 100% employee ownership structure

🌎 Global Snapshot

Despite a rescue package from the biggest banks in the US, First Republic’s shares continued their downward spiral on Monday (-47%!) as S&P cut the bank’s credit rating yet again. Meanwhile, JP Morgan CEO Jamie Dimon is apparently leading efforts for another rescue deal

Amazon announced fresh layoffs – 9,000 workers to be cut on top of the 18,000 previously announced, mostly in cloud and advertising divisions

The IMF has agreed a $2.9bn bailout for Sri Lanka to help restructure their debts and relieve the dire economic crisis

PDD Holdings, parent of Chinese eCommerce giant Pinduoduo, disappointed markets on Monday with revenue expectations that fell short of forecasts – shares fell -13.9%

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