Business

Hotter-than-expected inflation data sends US stocks lower

Iseq index outperforms its European peers, adding close to 0.8%

Traders work on the floor of the New York Stock Exchange. US inflation data sent shockwaves through equities and bonds markets on Wednesday. Photograph: Michael M Santiago/Getty Images

Ian Curran
Wed Apr 10 2024 - 17:58

Wall Street’s main stock indexes tumbled on Wednesday as investors turned risk averse after a stronger-than-anticipated inflation reading doused hopes of the Federal Reserve kicking off its monetary easing cycle in June.

After an initial sell-off following the US report, European shares finished the session ahead with all eyes on the European Central Bank’s regular monetary policy meeting in Frankfurt on Thursday.

Dublin

Irish shares outperformed their European peers with the Iseq index advancing 0.78 per cent as investors mulled the latest US inflation data.

Traders in Dublin said the macro outlook around interest rates and inflation was at the forefront of investors’ minds as Irish shares initially sold off following the US numbers before recovering by about 0.5 per cent into the close.

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Banks were among the biggest movers on the session with Bank of Ireland surging 2.4 per cent to above the €10 per share mark and holding there into closing bell. AIB, meanwhile, moved 0.7 per cent higher to €4.99 per share, while PTSB slumped 2.6 per cent to €1.50 per share on very low trading volumes.

Also outperforming its European and UK peers, Ryanair advanced by 1.1 per cent to €21.56, while Kingspan recovered some of Tuesday’s 1.5 per cent decline, edging 0.7 per cent higher to €83.90 per share.

Rates-sensitive home builders Cairn Homes and Glenveagh added 1.5 per cent and 3.5 per cent to €1.61 and €1.29 per share. Glenveagh likely benefited from a broker note issued by Davy Stockbrokers on Wednesday morning, reiterating its buy case for the builder.

London

UK stocks rose on Wednesday, underpinned by strength in stocks nearly across the board. Reversing Tuesday’s marginal losses, the resources-heavy FTSE 100 added 0.3 per cent while the mid-cap FTSE 250 index was flat on the session.

Personal goods index led sectoral gains, adding 2.8 per cent on a 3.2 per cent rise in Burberry, while supermarket giant Tesco added more than 3 per cent on rising revenues and the announcement of a £1 billion share buyback programme.

UK lenders Lloyds, Barclays and NatWest advanced by between 0.5 per cent and 3 per cent after US inflation data cemented the bets that rates will remain higher for longer than expected.

Europe

European shares were little changed with both the blue-chip Stoxx 50 and the cross-continental Stoxx 600 index essentially flat on the session.

On trading volumes following the publication of the key US inflation print for March and April, European banks were among the biggest movers with Italian lender Intesa Sanpaolo, Spanish banks Santander and BBVA and France’s BNP all up by between 0.1 per cent and 1.2 per cent.

Bucking the trend, Swiss banking giant UBS fell by almost 3 per cent amid reports the lender will face tougher capital requirements in a bid to prevent a repeat of the Credit Suisse crisis.

Meanwhile, surging sales at Taiwan Semiconductor Manufacturing from the boom in global AI development boosted tech stocks. Dutch chipmaker ASML advanced 1.6 per cent to near the top of the table, although German multinational software company SAP SE shed 0.5 per cent.

New York

US equities extended their April losses, with the S&P 500 down about 1 per cent as the US consumer price index topped forecasts for a third month. The Nasdaq Composite and the Dow Jones Industrial Average also shed slightly more than 1 per cent by closing bell in Dublin.

The real-estate sector, which led declines, fell 4 per cent and was on track for its worst single-day drop since June 2022. New York-listed property investment trust Prologis and commercial real-estate services group CoStar both declined by more than 5 per cent.

Most megacap growth stocks slipped, but AI giant Nvidia bucked the trend and was last up 1.4 per cent.

Among single stocks, US-listed shares of Alibaba gained 1.3 per cent after the company’s co-founder Jack Ma penned a lengthy memo to employees on Tuesday, expressing support for the internet giant’s restructuring efforts – a rare move from the billionaire who has spent the last few years away from the spotlight. – Additional reporting: Bloomberg, Reuters

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times

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