Markets

Markets subdued as rise in inflation dents hopes of early interest rate cuts

In Dublin the Iseq All Share fell slightly but still performed better than European peers

Economic data has eased pressure on Jerome Powell's Federal Reserve and the European Central Bank to cut interest rates soon. Photograph: Win McNamee/Getty Images

Ellen O’Regan
Fri Jan 5 2024 - 17:52

Global markets were subdued on Friday as economic data from both the US and the euro zone showed that interest rate cuts may not be coming as soon as investors had hoped. In Dublin the Iseq All Share fell slightly but performed better than European peers. It finished 0.06 per cent off at 8,661.46.

Dublin

It was a good day for the banks, with AIB rising by 3.24 per cent to close at €4.21, while Bank of Ireland was 1.88 per cent higher on €8.88 and Permanent TSB gained 1.69 per cent to close at €1.80.

Ireland’s two listed home-builders also saw gains on the day. Cairn Homes finished 0.15 per cent ahead on €1.33 and Glenveagh Properties advanced by 0.65 per cent to close at €1.24. Building materials company Kingspan did not fare as well, shedding 1.97 per cent to close at €74.74.

Among the biggest index constituents, Paddy Power parent company Flutter Entertainment fell by 0.26 per cent to close at €154.55, while budget airline Ryanair saw its share price close at €18.35 after rising by 0.47 per cent.

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Food company Kerry Group was 1.08 per cent weaker at €77.14, while peer Glanbia lost 0.73 per cent to finish at €14.86.

Among other fallers on the day packaging giant Smurfit Kappa gave up 1.81 per cent to €35.19, and Dalata Hotel Group ended the session 0.88 per cent down at €4.52.

On the upside insurer FBD Holdings gained 0.44 per cent to close at €11.40, and shipping and transport company Irish Continental Group rose by 2 per cent to €4.60.

London

The export heavy FTSE 100 Index fell by 0.45 per cent on Friday to close at 7,688.52, while the more domestically-focused FTSE Mid-Cap 250 Index was down 0.63 per cent to close at 19,249.77.

Figures from mortgage lender Halifax noted that British house prices rose in annual terms in December for the first time in eight months, adding to signs of stabilisation in the property market after a hit from higher borrowing costs. Separately, a survey indicated Britain’s construction sector showed signs in December that it might have seen the worst of a slump caused by the steep climb in interest rates.

Rental company Ashtead Group fell to the bottom of the FTSE 100, losing 2.82 per cent.

Meanwhile, communications and advertising company WPP climbed to the top of the index, gaining 3.77 per cent.

Europe

The pan-European STOXX 600 Index ended 0.27 per cent off, closing at 476.38. The German Dax slipped 0.14 per cent to 16,593.80, while the French CAC 40 Index lost 0.4 per cent to close at 7,420.69.

Inflation data on Friday showed prices in the euro zone rose 2.9 per cent year-on-year in December, up from 2.4 per cent in November and potentially creating less urgency for the European Central Bank to start cutting borrowing costs from record highs.

Among individual stocks drinks groups Remy Cointreau and Pernod Ricard fell after China announced the launch of an anti-dumping investigation on brandy imported from the European Union. Remy Cointreau fell to the bottom of the Stoxx 600 Index, losing 12 per cent, while Pernod Ricard fell by 3.57 per cent.

Signify shed 0.93 per cent after Barclays initiated coverage of the world’s largest light-maker’s stock with an “underweight” rating.

New York

Wall Street’s main indices edged higher on Friday, although a stronger-than-expected jobs report tempered expectations of rapid interest rate cuts by the Federal Reserve this year.

Some big tech stocks such as Amazon.com, Nvidia and Microsoft edged higher on Friday afternoon, but others, including Apple, declined. Apple has seen its weakest start to a year since 2019, with the stock falling sharply after analysts flagged a weak macro-environment in China pressuring demand for iPhones.

Applied Therapeutics tumbled after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Peloton jumped after the fitness equipment maker said it will bring its workout content to short-form video platform TikTok in an exclusive partnership. – Additional reporting, Reuters.

Ellen O'Regan

Ellen O’Regan

Ellen O’Regan is an Irish Times journalist.

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