Markets settle as investors bet on slower rates hikes

Investor nerves settled somewhat on Friday after interest rate and recession anxieties roiled equities earlier in the week.

European shares climbed after comments by a European Central Bank official, indicating that Frankfurt could soon begin to slow the pace of interest rate hikes.

Dublin

In what traders in Dublin described as a quiet session, the Iseq index closed up 1.7 per cent, in line with its European counterparts.

Bank shares benefited somewhat from a broader lift in European financial stocks, albeit on low volumes. AIB added close to 0.9 per cent to finish the week at €2.98 per share, while Bank of Ireland, up nearly 0.5 per cent, finished at €7.64. Permanent TSB, meanwhile, was essentially flat at €1.73 after announcing plans to increase its fixed term mortgage and deposit rates.

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Topping the Iseq on Friday was Paddy Power owner Flutter, which continued to feel the benefit of what traders said was a very positive capital markets day in the US earlier this week. Shares in the betting giant jumped nearly 3.7 per cent to finish the week at 133.05.

Other large caps also saw increases. Smurfit Kappa gained nearly 2.4 per cent to finish the session at €35.11 per share, practically erasing Thursday’s 2.6 per cent drop-off. Ryanair shares added 1.8 per cent to close at €12.74 while Kingspan added nearly 2 per cent to €58.22 per share.

London

The benchmark FTSE 100 index gained just over half a per cent on Friday to close at a two-month high. Shares in Britain’s major banks continued to receive a boost after the UK government confirmed on Thursday that it would slash its tax surcharge on the sector to 3 per cent from 8 per cent.

Shares in Lloyds, Barclays and NatWest added between 0.7 and 2.3 per cent. Bucking the trend, HSBC shares, down 10 per cent since August, shed 0.6 per cent of their value on Friday.

Topping the index was sports fashion retailer JD Sports, up 4.3 per cent on the session after its US peer, Foot Locker, lifted its full-year outlook and reported better-than-expected third-quarter results. High-street fashion giant Next added 2.6 per cent, more than making up for Thursday’s 0.6 per cent decline, which followed the UK chancellor’s grim update on the UK economy.

Energy and exploration stocks declined as oil and gas prices continued to stumble. Tullow Oil gave up close to 1.4 per cent while Shell and BP were down between 0.4 and 0.7 per cent.

Europe

Comments by Dutch central bank president Klaas Knot helped lift European stocks on Friday. The typically hawkish ECB governing council member said in a speech that “as the stance of monetary policy tightens further, it will become more likely that the pace of increases will slow”. Mr Knot said he also expected Frankfurt to reach “broadly neutral territory at next month’s policy meeting”.

The blue-chip Stoxx 50 index added 1.2 per cent, led higher by banks like Italian Intesa Saopalo. The lender, which gave up 0.6 per cent on Thursday, gained close to 1.8 per cent on high trading volumes on Friday after the ECB announced that European banks were set to return €296 billion in refinancing payments to the central bank. Spanish lender Santander was also up nearly 2.8 per cent along with Dutch bank ING Groep, up 1.31 per cent.

In what was otherwise a sea of green in Europe on Friday, German software company Sap, up 29 per cent in the last month alone, was the biggest loser on the session, giving back 2.4 per cent. Dutch conglomerate Philips, down close to 0.4 per cent, slid for the third session in a row.

New York

US equities were largely unchanged and oil futures fell one day after Federal Reserve policymakers signalled that interest rates would continue to rise for a while. The S&P 500 index was up 0.4 per cent and the tech-heavy Nasdaq 100 was flat with shares in global ecommerce giant Amazon down close to 2 per cent as investors weighed Thursday’s cost cutting announcement.

Tesla shares, down 8 per cent in the past five sessions, slid again on Friday as the chaos continued at chief executive Elon Musk’s latest investment, Twitter. Shares in Google owner Alphabet slumped between 1.4 per cent and 1.6 per cent while Apple was essentially flat on the session.

Bitcoin was on course for a weekly gain even as the collapse of Sam Bankman-Fried’s FTX empire continues to rattle the crypto market. – Additional reporting: Bloomberg, Reuters