Business

European shares inch up as Federal Reserve sets tone on interest rate expectations

US stocks subdued in choppy afternoon trading

Markets were subdued after contrasting messages from the world's big central banks this week. Photograph: Angela Weiss/AFP via Getty Images

Laura Slattery
Fri Dec 15 2023 - 17:58

European shares inched up on the final day of a week marked by major central bank policy decisions, in which the US Federal Reserve set the tone for market expectations about interest rate cuts being on the horizon.

The Fed signalled lower borrowing costs in 2024. However, European Central Bank (ECB) policymaker Francois Villeroy de Galhau said that although the ECB’s next move should be lowering rates, it should first “enjoy the view” for a while, keeping rates in the euro zone at their current record high.

DUBLIN

The Iseq added 0.7 per cent, as Flutter Entertainment, Kingspan and Ryanair all advanced.

Paddy Power owner Flutter rose 0.65 per cent to €155.30, insulation maker Kingspan added 1.2 per cent to €80.66 and Ryanair finished 0.7 per cent higher at €18.84. Packaging group Smurfit Kappa also nudged up 0.1 per cent to €36.42.

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The top gainer of the day, however, was PTSB, which surged 6.7 per cent to €1.68 after it secured approval from the Central Bank to return to pay dividends, which the lender has not done since before the financial crisis.

LONDON

The FTSE 100 fell 1 per cent, led by a drop in pharma and biotech stocks, while the FTSE 250 mid-cap index edged 0.3 per cent lower, but both the major equity averages managed to eke out some gains for the week that was dominated by interest rate decisions from major central banks.

Goldman Sachs said it expects the Bank of England to deliver its first rate cut in June, compared to a previous expectation of August.

Industrial metal miners jumped 1.2 per cent, while energy stocks reversed earlier gains to slide 1 per cent as oil prices eased after New York Fed president John Williams pushed back on surging market expectations for interest rate cuts.

AstraZeneca fell 2.7 per cent after rising for the last three sessions, dragging the pharma and biotech sector down by 2.6 per cent. Trainline surged 11.3 per cent following news that the UK government has ditched plans for a centralised online rail ticket retailer.

EUROPE

The pan-European Stoxx 600 edged 0.1 per cent higher on Friday, posting its fifth straight weekly advance and recording its longest weekly winning streak since April. The German benchmark Dax was flat, while France’s CAC-40 climbed 0.3 per cent after both hit record highs on Thursday.

Swedish technology firm Sectra jumped 8.3 per cent following second-quarter results. Stockholm-listed receipts of Millicom gained 2.7 per cent after the telecom group raised its target and launched a share buyback programme.

Symrise lost 7.6 per cent after the German flavour and fragrance maker cut its full-year earnings margin guidance.

Campari shed 2.9 per cent after the Italian spirits group announced its biggest-ever acquisition to buy French cognac house Courvoisier.

NEW YORK

The S&P 500 and the Dow were subdued in choppy trading on Friday afternoon after the comments from Mr Williams dampened recent optimism about potential rate cuts next year, though the benchmark index was set for its longest weekly winning streak in over six years.

A survey showed domestic business activity picked up in December amid rising orders and demand for workers, which could further help to allay fears of a sharp slowdown.

Propping up the tech-heavy Nasdaq were mega-caps such as Microsoft, Nvidia and Amazon, adding between 1.1 per cent and 1.5 per cent.

Intel rose 4.1 per cent after BofA Global Research upgraded the chipmaker’s shares to “neutral” from “underperform”, while Broadcom advanced 3.4 per cent to hit a record high of nearly $1,150.

Additional reporting — Reuters

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics

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