Wednesday 25 April 2018

Fed stimulus shock sparks slump

Peter Flanagan

Peter Flanagan

MOST Irish shares fell yesterday, as markets reacted with dismay to the US Federal Reserve's minutes released on Wednesday night which indicated it was less likely to stimulate the economy again in the near term.

By the close the benchmark ISEQ Overall Index had lost 1.17pc, or 37.33 points, to end the day at 3,156.

The market trended lower from the opening, and fell as low as 3,150 before staging a mini-recovery at the close. More than twice as many stocks fell as climbed during the session.

Commodities plays had by far the most difficult day on the market.

Oil and gas explorer Petroneft tumbled 10pc, while ilmenite miner Kenmare Resources slumped 6.52pc to 42c.

Most precious metals fell in value yesterday, as the lack of further stimulus in the near future hit prices on metals used as a defensive play against the prospect of a new round of quantitative easing.

Turkmenistan-focused exploration firm Dragon Oil slid 2.37pc to €7.08 after completing a purchase of its own shares.

Pharmaceuticals firm Elan slumped 2.03pc to €11.08.

The discouraging Fed data had a similar affect elsewhere, as European stocks declined the most in more than two weeks.

Retreated

National benchmark indices fell in 16 of the 18 western European markets. The UK's FTSE 100 dropped 1pc.

France's CAC 40 slid 0.7pc and Germany's DAX retreated 0.5pc. The benchmark Stoxx Europe 600 Index fell 1.1pc.

"It was clear that the Fed would not take any actions because they already have the Operation Twist programme," said Andreas Lipkow, an equity trader at MWB Fairtrade in Frankfurt. "Some market participants hoped that the Fed would give some signals for further actions." BHP Billiton, the world's largest mining company, lost 3.3pc.

The stock was cut to neutral from outperform at Credit Suisse.

Telecom Italia led telecommunication stocks lower, sliding 6.5pc. Revenue growth from Latin America is poised to slow to 2.7pc in 2013 from 12pc last year, according to an estimate by Bernsteins.

G4S, the world's largest security-guard supplier, fell 2.6pc after Britain had to call in the military to beef up the company's efforts to staff London's Olympic Games in two weeks.

Aegis Group surged 45pc, the biggest jump since at least January 1991. Dentsu, a Japanese advertising company agreed to buy Aegis in a deal valued at about £3.2bn (€4.1bn).

Premier Oil rose 2.1pc after it agreed to buy a 60pc stake in Rockhopper Exploration's assets in the Falkland Islands.

Rockhopper declined 13pc, erasing an earlier gain of as much as 16pc.

Irish Independent

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