If markets have been volatile recently, their performance on Thursday was in another league as the Swiss central bank shocked investors by scrapping the cap on the value of its franc against the euro, sending the European currency tumbling and shares on the proverbial rollercoaster ride.
The FTSE 100 immediately slumped on the Swiss news, losing the early gains it made on the back of a recovery in copper prices, before later recovering again after better than expected New York manufacturing data - which ironically did little to lift Wall Street after disappointing results from Bank of America and Citigroup. The leading index finally closed up 110.32 points at 6498.78, the day’s peak, having fallen as low as 6298.
The Swiss market ended down 8.7%, the biggest one day percentage drop for 25 years.
With investors seeking havens for their cash, gold and silver moved higher and pushed up mining group Randgold Resources by 315p to £52.65 and Mexican precious metals specialist Fresnillo by 39p to 855p, helping the market rally from its lows.
The biggest faller, however, was influenced by events closer to home.
Kingfisher, the owner of DIY group B&Q, dropped 10.6p to 318.6p after poor results from rival Homebase, owned by Home Retail Group. Homebase’s like for like sales in the 18 weeks to 3 January rose by just 0.6%, compared to City expectations of a 4% increase.
Meanwhile Home Retail’s Argos business also disappointed, up 0.1% compared to forecasts of 2%. Home Retail lost 12.9p to 199.1p while Dixons Carphone fell 9.6p to 434.4p hit by the Argos results.
Imperial Tobacco lost 82p to £28.50 as its shares went ex-dividend, while housebuilders came under pressure after Bovis Homes, down 50p at 769.5p, warned that volumes would increase more slowing in 2015 than they did last year. Persimmon fell 12p to £14.56 while Barratt Developments was flat at 425p.
Elsewhere Compass closed 14p lower at £10.91 after Credit Suisse cut its recommendation from outperform to neutral. It said:
It’s principally a valuation call and for those investors who own Compass we see no compelling reason to sell the shares but do flag some 2015 risks (US wage inflation, oil and gas slows like mining, bull case of volume recovery undermined as US hours worked at new peak).
Whilst Compass has invested behind growth in both the US and Europe (capex on new contracts and sales teams) we see limited prospect of any cyclical help given 2.3% average growth in US hours worked since 2010 has not flowed through to volumes. Wage inflation (which we think is tougher to manage than food inflation) is rising at its greatest pace since 2008. Energy contracts (42% of remote sites) might see similar pressures to those of mining in 2013-14.
As the oil price steadied, Royal Dutch Shell B shares rose 77p to £21.29 while BG was 25.7p better at 820.4p and Weir Group, the pumps specialist which supplies the sector, added 48p to £16.56.
IG Group dropped 32.5p to 709.5p after the trading and spread betting group said it could be hit by up to £30m thanks to the Swiss bank turmoil.
