Sunday 21 January 2018

Interest rate fears push markets lower for fourth straight session

Peter Flanagan

Peter Flanagan

SHARES across Europe slumped again yesterday as traders counted down to the US Federal Reserve decision on whether to increase interest rates or not next week.

The Stoxx Europe 600 Index slumped 2.2pc - the most since September - while in London the FTSE 100 dropped a similar amount. In Paris the CAC 40 Index fell 1.8pc and Frankfurt's DAX Index gave up 2.4pc. Dublin's ISEQ Overall Index fared little better, sliding 0.85pc - 56.66 points - to close at 6,628.15.

US Federal Reserve chairman Janet Yellen is expected to increase interest rates for the first time in almost a decade on Wednesday.

That has sparked worries that companies and individuals may be hit by higher rates of repayment on mortgages and other loans.

"Although everyone is expecting a rate hike from the Fed next week, a lot of questions remain about the future of monetary policy," said Francois Savary at Geneva-based investment management firm Prime Partners. "You currently have one central bank in a tightening cycle, and the other can't actually deliver on expectations. The ECB's disappointment last week showed that Draghi's hands are tied. That's why investors are so unsettled now."

In Dublin, commodity-based firms were badly hit in what has become a regular feature of the market, with Ovoca Gold, Ormonde Mining and Providence Resources all suffering.

CRH lost 1.97pc to hit €26.13. The building materials firm does about a third of its business in the US, and may be affected by the rate rise.Paddy Power slipped 1.9pc to €117. The gambling giant hopes for shareholders to sign off on its mega-merger with Betfair in 10 days' time.

C&C, meanwhile, gained 0.7pc to €3.61. The drinks firm signed a distribution deal in the US with student favourite Pabst Blue Ribbon (PBR). PBR also has an option to buy C&C's struggling US operation.

Irish Independent

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