ISEQ up 1.85pc after Fed injection
Published 05/11/2010 | 05:00
IRISH shares rose yesterday as markets around the world were buoyed by the US Federal Reserve's decision to pump $600bn (€420bn) into the economy there.
On the day, the ISEQ Overall Index gained 1.85pc, or 50.17 points, to close at 2756.41 -- its highest point since the middle of September.
One of the biggest percentage gains of the day was made by Kenmare Resources, which closed up 19.13pc at 27c, after Bank of America rated the company as a 'buy' and suggested that the mining company may become a takeover target.
Among the bigger companies, CRH was the star. The construction giant finished up 4.56pc at €13.65 after the Fed said it would start buying US government bonds to the value of $600bn -- more than was expected.
This second round of quantitative easing could be of great benefit to CRH, which does much of its business in the US.
The vast majority of the index closed in positive territory, but the banks again took a hammering. The yield on 10-year government bonds passed 7.5pc during the day before falling back to 7.48pc, while Irish credit default swaps, a form of insurance against default, were trading at a record 557bps.
On the back of those numbers, it was unsurprising that all three banks were hit again. Allied Irish Banks closed down 6.25pc at 30c, Bank of Ireland lost 1.41pc to close at 49c, and Irish life & Permanent dropped 2.82pc to close at €1.31.
Elsewhere, the Fed's 'QE2' had the same effect as in Ireland. National benchmark indexes climbed in all of the 18 western European markets except Portugal and Greece.
The UK's FTSE 100 Index gained 2pc, France's CAC 40 Index increased 1.9pc, and Germany's DAX Index climbed 1.8pc. The composite Stoxx 600 rose 1.6pc to its highest point since April.
"A large number of more leveraged investors are using QE as the argument to put money to work before the end of the year," said Edinburgh-based Andrew Milligan, head of global strategy at Standard Life investments. "This has been a long time coming."
BNP Paribas rose 3.7pc after the Paris-based lender reported a 46pc increase in third-quarter profit, helped by its consumer-banking networks in France, Belgium and the US.
The jump in retail earnings more than offset lower corporate- and investment-banking profit.
Unilever rallied 5.5pc in Amsterdam as the world's second-biggest consumer products maker reported a 19pc rise in third-quarter net income.
BHP, the world's largest mining company, rallied 6.6pc after the Canadian government blocked a bid for Potash Corp. BHP head Marius Kloppers obtained $45bn of loans in September to fund the acquisition, which has met opposition from politicians and investors.