Saturday 24 March 2018

Fed rules the day as Euro markets wait for Yellen

Janet Yellen, chair of the US Federal Reserve
Janet Yellen, chair of the US Federal Reserve

IRISH shares were little changed yesterday as traders waited with baited breadth for the US Federal Reserve to announce whether it would increase interest rates for the first time in nine years.

By late afternoon in Dublin the ISEQ Overall Index has fallen 0.15pc, or 9.84 points, to 6,646.48.

The market had snapped a five-day losing streak on Tuesday, but was marginally back in the red by late afternoon.

While there was some corporate news, the Fed overshadowed everything else. While Fed chairman Janet Yellen was considered certain to move interest rates higher, there are fears that such a move may squeeze companies in Europe, where the recovery has not been anything like as strong as in the US.

AIB fell 2.2pc to just under 4c. The 99pc State-owned bank got the go ahead from shareholders to start a reorganisation of its finances that will see shares consolidated on a one for 250 basis and repay about 1.7bn to the State.

Datalex slipped 1.3pc to €3.06. The hotels firm agreed terms to buy the Tara Towers Hotel in Dublin for just over €13m and will invest another €4.5m in it.

Applegreen slipped 0.9pc to €5.30. The service station owner has to date avoided major penalty from the tumbling oil price. FBD Holdings slipped 2.2pc to €6.65. Almost as many shares rose as fell by yesterday afternoon. IRES Reit added 2.3pc to hit €1.12 after it said it had agreed an 83m deal to buy 442 apartments in west Dublin.

Paddy Power climbed 1.5pc, albeit on light volume, to hit €119.85. Shareholders will get the chance to sign off on its merger with Betfair next Monday.

The holding pattern ahead of the Fed continued across Europe. The Stoxx Europe 600 Index added 0.3pc. In London the FTSE 100 Index gained 0.7pc while in Paris the CAC 40 added 0.3pc. Germany's Dax Index rose 0.3pc.

"The real impact on today's decision happened in the last seven, eight days," said Guillermo Hernandez Sampere at MPPM EK in Eppstein, Germany. "Investors will listen very carefully to the wording from the Fed. What investors want to hear is that the US economy is in good shape and that the speed further rate hikes will be very gradual."

Among stocks moving on corporate news, Casino Guichard-Perrachon rallied 6.5pc after saying it will sell assets to cut debt by more than €2bn next year.

Rolls-Royce advanced 4.9pc after announcing a management shake-up. Vestas Wind Systems climbed 4.1pc as the US Congress is set to vote on a bill that would extend renewable-energy credits.

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