Saturday 16 December 2017

Markets bullish on Fed speculation

Peter Flanagan

MARKETS rebounded sharply yesterday as bulls waded in amid speculation that the US Federal Reserve will launch a third round of quantitative easing later this week.

The ISEQ Overall Index was buoyed not just by the rally worldwide, but also by strong results from insulation company Kingspan, as its earnings season continued to produce some pleasant surprises.

By the close of trading the ISEQ Overall Index was up 1.33pc at 2,452.07.

The index jumped into positive territory from the opening, as Kingspan's results and higher US futures indicated a positive day was in the offing.

The construction materials firm was a big winner on the day, climbing 4.26pc to €6.12 after the company said it had had an "unusually robust" first six months of the year.

The belief that US Fed chairman Ben Bernanke may announce a third round of quantitative easing with his annual speech in Jackson Hole, Wyoming, boosted US-focused stocks, with CRH the chief beneficiary during yesterday's session. The construction giant added 1.62pc to close at €11.29.

Independent News & Media rebounded, adding a whopping 19.4pc to reach 24c by the end of the day. The company reported interim numbers on Friday.

There were some losers, despite the widespread buying. Elan fell 3.95pc to €6.75 in a continuation of the losses it has sustained over the past month.

European stocks rebounded from a two-year low, as traders looked forward to Bernanke's comments at Jackson Hole.

National benchmark indices climbed in 12 of the 18 western European markets. The UK's FTSE 100 Index and France's CAC 40 Index each increased 1.1pc, while Germany's DAX Index slipped 0.1pc. The Stoxx Europe 600 rose 0.8pc.

"We believe the Fed will want to reassure markets and could use Friday's Jackson Hole symposium to do so," said Graham Bishop, an equity strategist at Royal Bank of Scotland in London.

"The Fed's commitment to keep rates on hold until 2013 is, arguably, the precursor to a more significant policy announcement."

Gold hit a new record of $1,894 per ounce, amid speculation that it may top $2,000 by year end.

ICAP, the world's largest broker of trades between banks, gained 3.8pc and its rival Tullet Prebon increased 1.7pc. Sydbank, Denmark's third-largest publicly traded lender, lost 3.1pc and Danske Bank slid 3.6pc.

Micro Focus International fell 3.4pc after it said it ended talks with possible bidders.

Essar Energy dropped 3.8pc amid delays in setting up power plants and gaining approval for coal projects. The Indian company said regulators stalled approval of some coal-bed methane projects, which generate natural gas from coal.

Irish Independent

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