Tuesday 17 July 2018

Markets rebound after Black Monday

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters

Bloomberg and Colm Kelpie

The worst day for European equities since the financial crisis gave way to the biggest rebound in four years yesterday.

The Stoxx Europe 600 Index climbed 4.2pc at the close of trading in London, extending gains to 4.7pc after China's central bank said it cut interest rates.

Yesterday's rebound was just as broad-based as Monday's slump, with almost all Stoxx 600 companies rising, and volume of shares changing hands 78pc greater than the 30-day average.

By the close in Dublin, the ISEQ Overall Index was up 4pc, or 232.73 points - its biggest daily jump in more than five years - to close at 6,094.72, to recover some of Monday's losses.

The leaders on the Dublin market included insulation group Kingspan, which rose 7pc to €21.75, while Independent News & Media, the parent company of this newspaper, rose 6.3pc to 17 cents.

On the other side of the board, the laggards included insurance group FBD, which fell 1pc after slumping 21pc the previous day. It closed at €5.35. Oil and gas exploration group Petroceltic dropped 2.8pc to 62 cents.

Germany's DAX Index rose 5pc after closing on Monday in a bear market, and the UK's FTSE 100 Index added 3.1pc, climbing from its lowest level since 2012.

All western-European markets rallied more than 1.3pc yesterday.

"It's encouraging in the sense that they're trying to mitigate the impact of the decline," said Peter Dixon, a global economist at Commerzbank in London, referring to China's move yesterday.

"Investors panicked yesterday, concerned about of the lack of reaction, and this might help. Markets are beginning to realise this is a Chinese problem, not a European one.

"These are specific issues which refer to fundamentals in other markets and do not reflect the situation in Europe."

Irish Independent

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