Friday 24 November 2017

Interest rate comment triggers surge

Peter Flanagan

Peter Flanagan

IRISH shares rose yesterday as global markets reacted strongly to comments from European Central Bank president Mario Draghi that implied interest rates will remain low for sometime to come yet.

By the close in Dublin, the ISEQ Overall Index had climbed 2.06pc, or 81.98 points, to close at 4,069.9.

There were broad-based gains across the market as more than five stocks rose for every one that fell. The big mover on the day was Independent News & Media, which surged 29.6pc to 7c. The media group's shares have more than doubled in the last month.

Origin Enterprises climbed 7.6pc to finish the day at €5.65. The agri-services business said it was selling out of its marine oils business, a move welcomed by analysts. Bank of Ireland added 7.1pc to close the day at 17c, while Kerry Group continued its good form of late, adding 4.2pc to end the session at €45.

Drinks company C&C regained a small part of Wednesday's losses, closing up 2pc at €3.92. Of the four laggards yesterday, pharmaceuticals firm Elan slipped 0.4pc to €10.71, while Allied Irish Banks dipped 1.7pc to 6c.

European stocks rose the most in more than two months as the European Central Bank said that interest rates would remain low for an extended period and Portugal's political leaders sought to hold their coalition government together.

National benchmark indices advanced in every western-European market except Iceland. The UK's FTSE 100 jumped 3.1pc, its biggest rally in 19 months. France's CAC 40 surged 2.9pc, and Germany's DAX gained 2.1pc. The composite Stoxx Europe 600 Index rose 2.3pc.

Portuguese and Irish bonds bounced back from Wednesday's sell-off. The yield on Portugal's 10-year bonds fell 20bps to 7.27pc, while yields on Irish 10-year debt fell back below 4pc.

ECB president Mario Draghi predicted that interest rates would remain low for an extended period of time.

"Forward guidance has entered the Eurotower," said Witold Bahrke, a senior strategist at PFA Pension in Copenhagen. "We got a taster at earlier meetings, but today's formulation is a real innovation."

Taylor Wimpey added 7.1pc. The UK's second-largest housebuilder by market value reported an operating-profit margin in its domestic market of more than 13pc, compared with 11.2pc a year earlier. Persimmon, the UK's largest homebuilder, added 4.4pc. Barratt Developments rose 5pc.

Oerlikon rose 3.5pc after the maker of textile machinery confirmed it will sell its natural-fibres business to Jinsheng Group of China.

Peugeot Citroen surged 10pc, its biggest gain since April 24. Goldman Sachs upgraded the shares of the French automaker to buy from neutral. The brokerage said that Peugeot would probably beat its goals for reducing cash consumption.

Irish Independent

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