Must read: UK house prices, Credit Suisse, HSBC

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

European markets kick off the week on a negative note, with the FTSE MIB in Italy leading the declines. The FTSE 100 is under pressure trading below 7,900, with oil giants Shell (LSE:SHEL) and BP (LSE:BP.) near the bottom of the index, dragged down by softer oil prices.

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WTI and Brent crude are both down by over 1.3%, pricing in the prospect of a weaker global demand outlook.

UK RIGHTMOVE HOUSE PRICE INDEX 

UK average asking prices rose by 0.2% month-on-month in April. According to Rightmove, year-on-year they increased by 1.7%, slowing from growth of 3% in March. The average asking price for a UK home now stands at £366,47, up £890 versus last month. For a first-time buyer, the average asking price is £244,963.

Rightmove’s director of property science Tim Bannister said "not only is the number of sales agreed now back to pre-pandemic levels, but homes are also on average selling twelve days more quickly than at this time in 2019."

The housing market appears to be showing signs of stabilisation as mortgage rates come off the highs seen in the aftermath of the mini-budget, rental prices rise making buying look increasingly attractive, and sellers cut asking prices to bolster demand for properties. The economy is also proving to be more resilient than last year’s expectations with the UK now forecast to stave off a recession this year as inflation finally cools. 

CREDIT SUISSE 

In its final set of financial results, Credit Suisse Group AG (SIX:CSGN) suffered a CHF 67 billion drop in customer deposits and CHF 61 billion in net asset outflows in the first quarter. Assets in its wealth management division also fell sharply from CHF 707 billion in Q1 2022 to CHF 502.5 billion in the same period this year. 

Turmoil in the banking sector that ultimately led to a rescue deal for the Swiss lender from UBS Group AG (SIX:UBSG) has prompted a major exodus from clients amid the lender’s uncertain outlook. However, Credit Suisse had already been struggling for a long time in the build up to the arranged marriage. It was embroiled in scandal after scandal and, in the fourth quarter, Credit Suisse reported a CHF 7.3 bn loss in 2022, the worst since the global financial crisis while liquidity concerns prompted significant outflows around October last year.

The newly merged entity when it joins forces is reportedly looking at significant job cuts of potentially as much as 20%-30% of Credit Suisse’s workforce, according to Tages-Anzeiger newspaper. UBS’ reappointed CEO Sergio Ermotti, who will be steering the acquisition, said there would be ‘change and hard decisions’ ahead. Focus now shifts to earnings from UBS on Tuesday with comments on Credit Suisse likely to take centre stage. 

HSBC 

Shareholder advisory group ISS has said HSBC Holdings (LSE:HSBA) investors should vote against Ping An Asset Management’s proposals to spin off its Asia business at its AGM on 5 May. Similarly, Glass Lewis sided with HSBC despite calls for a breakup from the Chinese insurer, also its biggest shareholder. Meanwhile, an activist shareholder Ken Lui, who has been pushing for the spin-off, said he is holding talks with Ping An for the first time about the plans. 

The battle is intensifying between HSBC and its dissenting shareholders. Proponents of the reorganisation believe HSBC is underperforming its peers and ignoring shareholder interests. However, the Hong Kong focused lender believes such plans would be very expensive and would destroy shareholder value. ISS which is siding with HSBC said the opposition’s plan "lacks detailed rationale."

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Despite the recent turmoil in the banking sector, HSBC shares have performed well so far this year, outperforming the FTSE 100, up nearly 8% year-to-date and over 13.5% year-on-year. HSBC prepares to deliver its latest financial results on Tuesday 2 May, with this debate likely to dominate the headlines.