MARKET REPORT: Roller-coaster ride for investors as ECB hikes interest rate

Investors endured another rollercoaster ride yesterday amid concerns about the banking sector and wider economy.

The FTSE 100 raced higher in early trading – rising 118 points or 1.6 per cent – in a relief rally sparked by a £45billion lifeline for troubled Swiss bank Credit Suisse.

Many observers thought the ECB would raise rates by just 0.25 percentage points, from 2.5 per cent to 2.75 per cent, given the strain the hikes are putting on the financial markets and banking system.

But it was unbowed, raising rates 0.5 percentage points to 3 per cent, as it had suggested it would before the chaos of the past week.

With investors struggling to take it all in, the FTSE 100 finally closed up 0.9 per cent, or 65.58 points, at 7410.03 while the FTSE 250 climbed 0.7 per cent, or 132.73 points, to 18,758.58. 

The moves were echoed across Europe with major benchmarks in Paris, Frankfurt and Milan whipsawing.

All eyes will now be on the US Federal Reserve and Bank of England when they make their latest interest rate decisions next week.

Just as the stock markets yo-yoed throughout the day, so did the oil price, diving towards $70 a barrel before recovering to stand around $74. BP fell 0.9 per cent, or 4.35p, to 482.45p and Shell was down 2.2 per cent, or 50.5p, to 2209p.

Source of data and images: dailymail