Choppy trading day in US as investors brace for big interest rate hike

European shares ditched almost all session losses in a volatile session on Monday, as investors brace for a week that could see a large interest rate hike by the Federal Reserve and a host of other central bank meetings. There was no trading in London due to a public holiday for the queen’s funeral.

DUBLIN

The Irish index of shares kicked off the week with a small gain, closing up just under 1 per cent at 6836. Shares in AIB and Bank of Ireland regained some ground, with the latter gaining 4.3 per cent to close at €7.30, and the former adding 2.1 per cent.

Building stocks were a mixed bag, with CRH closing at €35.53, up almost 1 per cent over the day. Insulation specialist Kingspan was largely flat at €55.78.

Ryanair shares were up 2.27 per cent, ending at €12.14.

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EUROPE

The pan-European STOXX 600 index, which traded lower for most of the session when it lost up to 1 per cent and hit two-month lows, gained about 0.2 per cent in the last hour before ending down 0.09 per cent.

While cautious gains in main regional bourses were led by a 0.5 per cent rise in the German DAX, France’s CAC 40 index underperformed, losing 0.3 per cent.

Weighing on sentiment there was the collapse of a merger plan between two TV companies, TFI and M6, that could have created a giant to challenge US streaming services such as Netflix.

Shares in TF1 fell 2.3 per cent and M6 declined 3.4 per cent as they noted antitrust requests had made the deal irrelevant.

More broadly, consumer and industrial stocks led gains, which were countered by losses in healthcare and real estate stocks. Volumes were thinned by a holiday in London.

In a bright spot, Volkswagen edged up 1.1 per cent as it saw a valuation of up to €75 billion for luxury sports car maker Porsche, in what will be Germany’s second-largest initial public offering in history.

Shares in Porsche Holding SE, Volkswagen’s top shareholder, added 3.5 per cent, topping Germany’s DAX index.

NEW YORK

Wall Street’s main indexes slipped in choppy trading on Monday, extending declines for a third straight session, on worries that the Federal Reserve’s aggressive interest rate hikes could tip the US economy into recession.

Five of the 11 S&P 500 sectors were lower. Healthcare stocks fell 1.6 per cent, weighed down by a 9.5 per cent fall in shares of Moderna, and similar declines in those of other vaccine makers a day after president Joe Biden said in a CBS interview that “the pandemic is over”.

The S&P 500 and the Nasdaq logged their worst weekly percentage drop since June on Friday as markets fully priced in at least a 75-basis-point rise in rates at the end of Fed’s September 20-21 policy meeting, with Fed funds futures showing a 15 per cent chance of a whopping 100 bps increase.

Unexpectedly hot August inflation data last week also raised bets on increased rate hikes down the road, with the terminal rate for US Fed funds now at 4.46 per cent.

At 11:38am eastern time, the Dow Jones Industrial Average was down 90.01 points, or 0.29 per cent, at 30,732.41, the S&P 500 was down 15.14 points, or 0.39 per cent, at 3,858.19, and the Nasdaq Composite was down 54.43 points, or 0.48 per cent, at 11,393.97.

Industrial stocks rebounded 0.5 per cent after a sharp drop on Friday. Banks gained 0.5 per cent. Tech heavyweights Apple Inc and Tesla Inc rose more than 1 per cent each to provide the biggest boost to the S&P 500 and the Nasdaq.

Take-Two Interactive Software dipped 1 per cent after it confirmed that a hacker had leaked the early footage of Grand Theft Auto VI, the next instalment of the best-selling video game.

— Additional reporting: Reuters, Bloomberg

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