Business World

Saturday 20 January 2018

Bond-buying sends gilts down as sterling rallies

Kingspan had gains of almost 4pc
Kingspan had gains of almost 4pc

Bloomberg/Sean Duffy

UK long-dated government bonds fell after investors lined up to sell them to the Bank of England(BoE) in its first successful purchase operation of that debt segment since expanding its quantitative-easing program this month.

A week after failing to receive enough sell orders in a similar transaction, the BoE said yesterday that it had an excess of offers for gilts coming due in more than 15 years compared with the £1.17bn pounds (€1.35bn) in securities it sought to buy.

"It will be a relief to the bank that this has been well covered and that a decent amount of the purchases were made at levels that were slightly below where the market had been trading," said Jason Simpson, a fixed-income strategist at Societe Generale in London.

"Unlike last week, they were not forced to pay above market prices."

The ISEQ overall index of Irish shares fell slightly yesterday, closing down 0.18pc, or 10.78 points, to finish the day at 6,035.05. Shares in Permanent TSB suffered losses of 7.6pc, while Kerry Group was down 1.1pc. Paddy Power Betfair shares lost 1.4pc in value and shares in Ryanair dropped by 1.5pc to close at 11.92.

Kingspan Group had gains of almost 4pc after analysts reported this week that the company is well placed to weather the effects of Britain's decision to leave the EU.

On the currency markets, sterling recovered from a three-year low against the euro to trade at €1.1549. The pound also rose over 1pc against the Greenback to $1.302.

On commodities markets, the price of a barrel of Brent crude rose by 1.2pc to reach $48.94 (€43.92) for a second successive day of gains. Speculation is rising that OPEC will freeze supply.

Irish Independent

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