Sunday 4 December 2016

US decision to end quantitative easing drives negative sentiment

MARKETS

Published 15/12/2011 | 05:00

Paddy Power chief executive Patrick Kennedy hailed 'a great first half' for the company
Paddy Power chief executive Patrick Kennedy hailed 'a great first half' for the company

The news on Tuesday that the US Federal Reserve doesn't plan to engage in further quantitative easing partly served to drive further negative market sentiment in Europe yesterday.

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Things weren't helped either by news from the EU's statistics office that industrial production in the euro area fell 0.1pc in October.

The decline was led by energy generation and the manufacture of products such as steel. Economists had been hoping the figure would be unchanged for October.

German economic growth that was forecast for 2012 was also slashed.

The flight to safety also continued, with the yield on 30-year German bonds falling to a euro-area record. US stocks, the euro and commodity prices all fell amid concerns that the debt crisis can't be contained.

The ISEQ Overall Index declined 1.52pc, or 41.33 points, to close at 2,681.21. It has erased all the gains it made since the beginning of the month.

Among yesterday's main movers were a chunk of the ISEQ's biggest components: CRH yielded 3.4pc, or 47 cent, to end the session at €13.18. Insulation maker Kingspan was down 3.1pc, or 20 cent, to €6.20, while merchanting group Grafton also declined 3.1pc, or 7.5 cent, to finish at €2.34.

Declined

Bank of Ireland shed 4.6pc to end the day at 8.2 cent, while food group Greencore lost 3.9pc, or 2.5 cent, to 61.5 cent.

There was better news for exploration firm Providence Resources, which advanced 10.6pc, or 24 cent to €2.50. It's continuing to probe its Barryroe well in the north Celtic Sea basin, where it says the "geological horizons" it encountered are consistent with expectations.

Betting group Paddy Power was 0.8pc softer at €39.48. It declined even as it announced its first deal in North America.

National benchmark indices dropped in every western European market except Greece. France's CAC 40 slid 1.7pc and Germany's DAX lost 0.8pc. The UK's FTSE 100 fell 1.1pc.

The Munich-based Ifo institute slashed its 2012 economic growth forecast for Germany to 0.4pc from a previous prediction of 2.3pc. Ifo said Europe's largest economy can avoid a recession unless the region's debt crisis worsens.

BMW lost 3.7pc to €50.97 and Volkswagen, Europe's biggest carmaker, slipped 3.9pc to €115.75. The weakening Chinese property market may signal a decline in demand for luxury cars said Dorris Chen, head of China research at BNP Paribas in Shanghai.

Baoxin Auto Group, a Chinese luxury car dealer that sells BMW vehicles, dropped 14pc on its first day of trading on Hong Kong's stock exchange. Zara-owner Inditex advanced 3.4pc to €63.78 in Madrid after the world's largest clothing retailer posted Q3 profit that climbed 6.2pc.

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