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Trending tickers: Credit Suisse | Kingfisher | Fresnillo

Logos of Swiss bank UBS and Credit Suisse in Zurich, Switzerland March 20, 2023. REUTERS/Denis Balibouse
UBS takes hit on outlook after Credit Suisse takeover. Photo: Denis Balibouse/Reuters (Denis Balibouse / reuters)

Credit Suisse (CS)

The Swiss establishment might have come to the rescue but the government-orchestrated deal for UBS (UBS) to acquire troubled Credit Suisse has angered many investors.

“Switzerland’s standing as a financial centre is shattered,” Octavio Marenzi, CEO of Opimas, said in a research note. “The country will now be viewed as a financial banana republic.”

Credit Suisse shares have plunged by over 50% as the merger continues to cause jitters.

UBS has had its credit outlook lowered by S&P Global Ratings and Moody's Investors Service as the bank faces integration and restructuring challenges following its emergency takeover of Credit Suisse.

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Read more: FTSE higher as calm returns to markets

The Swiss lender's rating outlook was cut to negative from stable by both firms, with analysts citing the risk of client attrition and the complex task of running down Credit Suisse's trading operations.

Victoria Scholar, head of investment at Interactive Investor, said: “Up to a third of the 120,000 jobs in the combined UBS/Credit Suisse group could be let go."

Kingfisher (KGF.L)

The company behind Screwfix and B&Q has revealed a sharp decline in profits from record levels achieved in the wake of the COVID-19 pandemic.

In the 12 months to the end of January adjusted pre-tax profit hit £758m ($928.8m), a reduction of more than 20%. This year it is expected to fall to around £633m.

Sales declined by 0.9% to £13bn. On a like-for-like basis, sales were 2.1% lower but 15.6% above pre-pandemic levels.

Shares in Kingfisher, which is listed on the FTSE 100 (^FTSE), lost 1.39% after it announced the 20% fall in adjusted pre-tax profit.

Kingfisher, which maintained its total dividend at 12.40 pence a share, also announced new medium-term financial priorities, focused on growth, cash generation and higher returns to shareholders.

Fresnillo (FRES.L)

Precious metal miner Fresnillo lost its shine this session, finding itself at the bottom of the FTSE 100.

Shares in the company slumped over 2% on Tuesday and are down 19% since the start of the year.

Earlier this month, the miner slashed its annual dividend by half, after 2022 results were hit by metal price volatility, and cost inflation.

“Our financial results were impacted by industry pressures including volatile precious metal prices and higher cost inflation,” chief executive Octavio Alvídrez said.

Read more: UK government borrowing hits February record on energy bill help

“While our workforce continued to feel the impact of the pandemic and caused delays to our development program, and more specific to Mexico, the labour reform which limited the use of contractors — requiring us to train new employees,” he noted.

Gold had somewhat of a rally as investors sought a safe haven from the bank turmoil but that appears to have lost steam, also hurting the share price of the world’s top silver producer and Mexico’s largest gold miner.

Market movers

Investors are turning their attention to upcoming rate decisions from the Federal Reserve and the Bank of England (BoE).

The US Federal Reserve will announce its decision around interest rates on Wednesday.

Expectations are swinging wildly as the events at Silicon Valley Bank and Credit Suisse have thrown in a curveball. But expectations are settling on a 0.25% hike in the Fed Funds rate to 5%.

Neil Wilson at Markets.com said that despite the apparent relief in financial markets, uncertainty is still in charge. "What we are seeing is that once events take over, policymakers are left with zero good options," he said.

Read more: Bitcoin price slides ahead of Fed rate meeting

"The Federal Reserve faces a dilemma and one of the most difficult decisions in years — it can hike or it can pause or even cut."

"Markets have become increasingly divided as to what the FOMC may well do when it comes to interest rates tomorrow, with opinions split between another 25bps hike, a pause, and a 25bps rate cut," said Michael Hewson, chief market analyst at CMC Markets.

In the UK, the Bank of England will make its call on interest rates on Thursday.

Over 50% of investors now expect the BoE to swerve a further interest rate rise when members of its Monetary Policy Committee meet later this week, according to a Refinitiv poll.

Watch: 'If the Fed doesn't raise rates, I would get more anxious': Strategist

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