Stocks flat as markets take rates decision in stride

A global gauge of equities hit its highest level in over a year on Thursday despite a slide in European share prices following the European Central Bank’s (ECB’s) latest interest rate hike.

US stocks, meanwhile, were trading higher after the US Federal Reserve’s largely priced-in decision to pause rate increases after European markets closed on Wednesday evening.

The euro hit a 15-year peak against the yen and a fresh four-week high against the dollar after the ECB lifted interest rates to a two-decade high of 3.5 per cent and hinted at more hikes ahead.

Dublin

The Euronext Dublin finished on session highs to leave the Iseq index flat. Although the message from Frankfurt is that there is more to come, traders in Dublin said Irish equities took the latest ECB rate hike in their stride.

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Origin Enterprises was among the biggest movers on the day. Shares in the company, which have been under pressure of late, surged 3.8 per cent to €3.65 per share after the agri-services group affirmed its full-year outlook.

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Hotel group Dalata, which reported strong first-half numbers on Wednesday, added 2.1 per cent to close at €4.77 per share. Strong momentum has built up behind the stock after it issued a third revenue forecast upgrade in a row, traders said.

Moving in the opposite direction, packaging company Smurfit Kappa fell another 2.6 per cent to €33.40 per share in line with a broader sectoral move. Ryanair, meanwhile, was off by more than 1 per cent to €16.66 per share.

Europe

In choppy trading following the ECB announcement, the benchmark Stoxx 50 index shed 0.25 per cent, while pan-European Stoxx 600 was essentially flat on the session.

Frankfurt also lifted its forecast for inflation by more than expected on Thursday, a hawkish surprise for investors as ECB president Christine Lagarde warned: “We’re not at our destination. We still have ground to cover.”

Banking stocks were mixed after Deutsche Bank announced that it expects trading revenue to decline by as much as a fifth in the current quarter. Shares in the German lender tumbled 2.6 per cent on the session, while its Spanish peer Santander fell by 1.7 per cent and Dutch bank ING declined by 0.75 per cent.

After flagging a sharp drop in full-year profits on Wednesday, Dutch tech investor Prosus added more than 2 per cent on Thursday after the stock received a buy rating from UBS.

London

Down early in the session, London’s benchmark FTSE 100 index added 0.3 per cent despite the poor performance of miners and other resources stocks. The mid-cap FTSE 250, meanwhile, was off by 0.7 per cent.

With the Bank of England also poised to raise rates by 25 basis points next week, investors have struggled to balance maintaining exposure to rising equities against possible headwinds from tighter monetary policies.

Miners were down by 0.4 per cent in early trading on weak Chinese economic data. Anglo American fell 0.1 per cent while Rio Tinto pared back earlier losses, finishing flat on the session.

Informa jumped 3.3 per cent after raising its annual profit and revenue outlook, while shares in online fashion retailer Asos soared 13.4 per cent after the company returned to profit.

New York

Wall Street’s three main indices were trending upwards by closing bell in Dublin on Thursday after the Fed’s decision to pause rate hikes on Wednesday. The Dow Jones was up 0.7 per cent, the S&P 500 added 0.4 per cent, while the Nasdaq Composite added 0.3 per cent.

Equity trading has been choppy since the Fed on Wednesday delivered a signal that it could follow its June hiking pause with two more rate increases this year.

While equities initially sold off after that decision, they had mostly regained their lost ground by Wednesday’s close to trade higher on Thursday as investors digested the news.

Guinness-maker Diageo’s US-listed shares added 0.4 per cent despite a downgrade by Goldman Sachs on concerns about US consumer demand.

Shares in T-Mobile added more than 3.8 per cent after Morgan Stanley upgraded its outlook for the stock.

Meta’s share price continued to benefit from the AI rally after analysts at Piper Sandler increased their price target for the stock on Wednesday, lifting the Facebook owner’s shares by 2.1 per cent. – Additional reporting: Bloomberg, Reuters