Wednesday 25 April 2018

Global stock markets calm nerves after Easter plunge

Traders at work as Spotify Technology made its debut on the New York Stock Exchange yesterday. The music-streaming company’s shares opened well above their offer price (NYSE)
Traders at work as Spotify Technology made its debut on the New York Stock Exchange yesterday. The music-streaming company’s shares opened well above their offer price (NYSE)
John Mulligan

John Mulligan

Global stock markets largely shook off the jitters yesterday after a shaky start fuelled by continuing fears over a looming trade war and battered tech equities.

Following a slump in US equities on Easter Monday, European bourses looked set to follow suit yesterday, opening lower.

But market contagion, which has also been expected due to concerns over falling oil prices as Russia increases supplies and Saudi Arabia contemplates price cuts, failed to materialise to any significant extent.

On Monday, the three major US stock indices each fell more than 2pc as a share rout wiped out the tech-heavy Nasdaq index's gains for the year and sent the benchmark S&P 500 crashing through its 200-day moving average, a closely watched technical indicator.

Yesterday, Ireland's ISEQ Overall Index pared earlier losses to end the session just under 0.2pc lower. The biggest decliners included financial services firm IFG, which shed more than 9pc after it said it wouldn't sell its Saunderson House wealth management arm.

Germany's DAX, the UK's FTSE-100 and France's CAC-40 all recovered ground later in the day from morning falls, although all remained in negative territory at the close.

Financial markets remained cautious after China said over the weekend that it would raise tariffs on 128 US products, deepening a dispute between the world's two biggest economies and stoking concerns about the potential impact of the trade standoff on global growth.

US Treasury yields and benchmark German bunds rose as stock markets firmed and as investors looked ahead to Friday's closely watched employment report for March.

US yields had dropped two-month lows on Monday, boosted by safe-haven buying as Wall Street reeled from a recent rout in technology shares.

Yesterday, Ireland's National Treasury Management Agency (NTMA), which manages the country's national debt, said it plans to hold a bond auction on May 10, and a treasury bill auction on June 14, subject to market conditions. The NTMA sold €4bn of bonds in January, attracting €14bn worth of orders from investors.

Tech stocks, following a recent rout that began in the United States, remained a pressure point in Europe after renewed criticism of Amazon by US President Donald Trump. He has claimed a deal between Amazon and the US Postal Service is costing taxpayers billions of dollars.

Shares in music streaming service Spotify also began trading in New York yesterday, opening at $165 a share - well above its $132 offer price.

The wider tech stock decline also came on reports that Apple intended to make more of its own parts, news that slammed European chipmakers such as AMS and STMicroelectronics.

But the fundamental picture of solid global growth and strong corporate earnings hasn't changed that much.

However, a White House that was market-friendly in 2017 has turned less so in 2018, adding a new twist to markets, said Larry Hatheway, chief economist at GAM Investment Management in Zurich.

"If equities are going to find a solid foundation to recover some of the losses they suffered over the last two months, it's probably going to be on the basis that companies can still demonstrate earnings and fundamental reasons that earnings story is intact," he said.

(Additonal reporting Reuters)

Irish Independent

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