Tuesday 21 November 2017

Markets jittery as Italian premier faces defeat in referendum

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City. Photo: Reuters
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City. Photo: Reuters

Sean Duffy

Dublin's Iseq overall index of Irish shares closed the week up slightly at 6,294.21, a rise of 0.28pc, or 17.78 points.

Insurance firm Abbey was the big winner of the day, with gains of 6pc, while Permanent Tsb shares rose by 3.9pc after it was announced that the firm is to sell over €2bn in distressed loans.

European markets were down across the continent as investors digested the likelihood of a defeat for the sitting Italian Prime Minister in the country's upcoming reform referendum.

The German DAX was lower by 0.2pc, while the French CAC fell by 0.5pc. Italy's MIB dropped by 1.3pc

The dollar is poised for its best rally in more than 15 years against the yen and bonds around the world were on course for their biggest two-week loss in at least 26 years. Central banks in Asia were compelled to take steps to shore up their currencies, while the greenback's strength also weighed on commodities. Gold tumbled to the lowest in more than five months. US stocks trimmed their gain for the week after approaching a record.

The catalyst is Donald Trump's victory in the US presidential election almost two weeks ago, and speculation the Federal Reserve will raise interest rates more rapidly than had previously been priced into financial markets. In her first public statement since the vote, Fed chair Janet Yellen told politicians on Thursday that the central bank is close to boosting borrowing costs. Speculation that Trump's new administration will increase fiscal stimulus was already bolstering bets on further hikes in 2017.

"The dollar is rampant," said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander in London. "It's just this assumption, and for now it still is an assumption, that the US is going to reflate next year from fiscal policy. Yellen's comments on Thursday probably helped the dollar."

Irish Independent

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