Business Irish

Sunday 17 December 2017

Markets rise as chances of Fed rate increase recedes

A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India
A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India

World stocks hit their highest level in more than a year and the dollar fell against the yen yesterday as expectations of a rise in Federal Reserve interest rates receded after weak US economic data.

Emerging market shares led the charge, touching their strongest levels since July 2015 as investors sought returns with interest rates likely to stay low for a prolonged period.

Eurozone government bond yields fell as some investors bet that the weak US data, which followed weaker-than-expected jobs numbers on Friday, would pressure the European Central Bank (ECB) to ease monetary policy further. The ECB meets today.

"With a September rate hike looking less likely to happen, the ECB might be more pressured to come up with a decision this week on further measures," said Benjamin Schroeder, senior rates strategist at ING.

In London, the FTSE 100 index was up 0.3pc at 6844. The German Dax rose by 0.7pc, while the CAC had gains of 0.6pc.

The main exchanges in Italy and Spain were up 1.4 and 1.2pc, respectively.

British Chancellor Philip Hammond said he wants the "best deal" for the financial services sector after the UK leaves the European Union.

Mr Hammond met with top bankers and insurers to discuss issues affecting the financial services sector as Britain prepares for negotiations to leave the EU after June's referendum.

Banks are worried about losing access to the bloc's single market once Britain had left.

"I understand the scale of the potential impact leaving the EU could have for parts of the financial services industry. That is why I am determined to listen to what the industry has to say on key issues, like access to the single market," Mr Hammond said in a statement.

"We want the best deal for trade in UK goods and services, including our world leading financial services industry... It is important Britain maintains its status as a great place for financial services," he added.

In Dublin, the ISEQ overall index of Irish shares was flat late yesterday afternoon at 6269.82, gaining 4.29 points, less than 0.1pc.

The day's big winner was Merrion Pharma, with shares in the soon to be liquidated company rising 21pc. Financial services firm IFG rose by 3.6pc, while Datalex shares rose by 2.8pc. Permanent Tsb had gains of 2.3pc.

The index was held back by losses for mining stocks, with Providence Resources and Ormonde Mining the day's biggest laggards. Bank of Ireland shares dropped by just over 1pc, while Smurfit Kappa stocks were back 0.8pc by mid-afternoon.

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