Thursday 17 October 2019

Dublin falls as markets fear withdrawal of Fed stimulus

Traders work on the floor at the New York Stock Exchange
Traders work on the floor at the New York Stock Exchange

Peter Flanagan

IRISH shares fell yesterday as markets feared the US and other central banks were preparing to withdraw stimulus measures which had held markets up in recent months.

By late afternoon, the Dublin market was set for its biggest percentage fall since the start of May, dropping 1.29pc, or 53.04 points, to 4,052.82.

The market had tailed off from the opening and kept sliding lower, as four stocks fell for every three that rose.

In percentage terms, the big mover on the day was Ormonde Mining, which plunged 13.3pc.

Miners and other commodity plays had a difficult session in general, with the Russian-focused oil explorer Petroneft plunging 7.5pc.

Kenmare resources slid 0.2pc even as it released an encouraging trading statement.

CRH dropped 2.6pc to €16.41. The construction giant makes around half it money from the United States, and if the Federal Reserve there did pull funding, it would likely have a detrimental effect on the company's bottom line.

Food and drink firms had slow day. Swiss baker Aryzta lost 1.8pc to fall to €44.63, while cider maker C&C dropped 1.7pc to €4.65.

On the other side of the board, Providence Resources bucked the trend for oil and gas companies during the session. The firm rose 2.2pc to €6.25. The super major Exxon is drilling for oil at the Dunquin licence in the Atlantic, which is part owned by Providence.

Elsewhere, national benchmark indices fell in all western European markets yesterday. The Stoxx Europe 600 Index dropped 1.4pc. In London, the FTSE 100 Index slid 1.5pc, while the CAC40 slipped 1.2pc. In Frankfurt the DAX bourse fell 1.5pc.

"My biggest worry is that central banks will lose their credibility, and that the Fed in particular, which has embarked on this huge quantitative-easing programme, will lose the faith of investors," said Kevin Adams at Henderson Global Investors in London.

PRESSURE

The US Fed buys about €62bn worth of Treasury and mortgage debt a month to support the economy by putting downward pressure on interest rates. Chairman Ben Bernanke said on May 22 the central bank may cut the pace of buying "in the next few meetings" if economic conditions improve.

Peugeot slid 2.3pc. The carmaker is discussing an eventual capital increase according to French press. The Peugeot family has discussed what percentage of dilution would be acceptable for them. "A capital increase is not on the agenda," said a company spokesman.

Evraz declined 1.8pc to its lowest price since the company moved its primary listing to London in 2011.

De La Rue, a supplier of cash-handling equipment and security products, fell 2.1pc.

Irish Independent

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