A tumultuous week in the markets ended on an uncertain note – suggesting fears remain after large losses from the collapse of Silicon Valley Bank.
The FTSE 100 (Financial Times Stock Exchange) index of the most valued companies on the London Stock Exchange started the day at around the 7,500 mark – better than all of Thursday and most of Wednesday and a 1% increase – but the early morning gains wore off as the day progressed.
The most widely followed index of European stocks, the STOXX 600, had similar results and started the day up 0.8%, also better than Thursday and most of Wednesday, but lost the gains by lunchtime.
It followed the close of Asian markets, including Tokyo’s Nikkei and China’s Shanghai Composite, in positive territory.
The activity comes after a group of 11 major banks provided $30bn (£24.7bn) of cash in an effort to end the crisis of confidence around First Republic, a regional US lender.
The bank had seen its share price collapse amid sector-wide balance sheet scrutiny following the collapse of Silicon Valley Bank (SVB) last Friday.
That collapse brought about a turbulent start to the week as the FTSE 100 was dragged down 2.2%, more than Friday’s 1.7% fall from when SVB news came through.
But the move did not reassure markets, as on Friday afternoon there was a 21% fall in share value.
Credit Suisse concerns
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On top of the Silicon Valley Bank collapse, the troubles of Credit Suisse also led to investor jitters this week.
Credit Suisse, Switzerland’s second-largest bank, has now been hit by a US investors lawsuit, over accusations the bank concealed its troubles.
It announced on Wednesday it had found “material weaknesses” in its financial reporting processes for 2021 and 2022.
Its shareholder, Saudi National Bank, said it would not provide any further financial assistance causing the value of the bank to fall by 30%.
Now the bank is being sued by US investors who claim the lender made “materially false and misleading statements” in its 2021 annual report.
‘We are not out of the woods’
Analysts have cautioned the difficulties are not over.
“We are not out of the woods,” the chief market analyst at financial services company Finalto said.
The FTSE 100 is on course to be 3% down in the week overall and there is concern over the involvement of large banks in supporting First Republic Bank (FRB).
“Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy,” billionaire investor Bill Ackman said.
“The [strategically important banks] would never have made this low return investment in deposits unless they were pressured to do so and without assurances that FRB deposits would be backstopped if it failed.
“The market has responded to this fictional vote of confidence with a 35% after-market decline in FRB stock.”
The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.
Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.
The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.
Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.
He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.
Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?
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Image: Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA
“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”
He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”
The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.
Image: Michael O’Leary believes the EU can take action on competition grounds. Pic: PA
Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.
The beginning of July marks the start of the European summer holiday season.
The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.
Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.
DGAC has warned of delays and further severe disruption heading into the weekend.
Many planes and crews will be out of position.
Mr O’Leary is not alone in expressing his frustration.
The French transport minister Philippe Tabarot has denounced the action and the reasons for it.
“The idea is to disturb as many people as possible,” he said in an interview with CNews.
Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.
The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.
Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.
Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.
The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.
One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.
“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.
Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.
Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.
Egon Zehnder International is handling the search for the CBI.
“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.
“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”
Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.
Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.
EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.
The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.
The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.
Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.
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Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.
He described the latest action as “recreational”.
Image: Michael O’Leary. Pic: Reuters
“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.
“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.
“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”
Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.
“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.