Global stocks were set for a strong weekly gain on Friday while US yields slipped as markets eyed the future policies of president-elect Donald Trump and its impact on the US economy. Traders are bracing for an agenda which is expected to include tariffs, tax cuts and deregulation.
European real estate stocks surged, propelling the benchmark index to a one-week high on Friday, while easing of geopolitical tensions also relieved some recent selling pressure. The pan-European STOXX 600 jumped 1.2 per cent, its best daily performance in nearly two months. The euro fell to a two-year low while the dollar gained after gauges of business activity were released in each region.
Dublin
The Iseq finished up 0.16 per cent on Friday as the value of Irish banking shares fell. Bank of Ireland dropped 3.6 per cent to €8.39 to close the week, while AIB fell 0.83 per cent to €5.35. Food suppliers Kerry Group was up 2.21 to €87.85 and Glanbia rose 1.37 per cent to €14.75. Kingspan rose 1.29 per cent to €74.40.
Property rental company, Ires Reit rose by 6.7 per cent to 87 cent a share after it released a three month trading update on Friday. Ryanair dropped 0.14 per cent to €18.21. Dalata Hotels fell 1.69 per cent to €4.36 a share.
London
Britain’s FTSE 100 recorded its biggest weekly gain in more than six months on Friday as a slide in sterling supported dollar earners, while banks came under pressure from weak business activity data.
The blue-chip FTSE 100 ended the day 1.4 per cent higher, and logged a 2.5 per cent weekly rise, its best since May 7th.
The pound tumbled 0.6 per cent to $1.25105 per dollar, its weakest since May, after data showed British business output in November shrank for the first time in more than a year, and retail sales also fell by much more than expected in October.
The currency’s decline helped lift shares of UK-listed international firms such as AstraZeneca, Unilever and Reckitt Benckiser, which draw a large portion of their revenue overseas.
“It’s a strange situation where you have lots of negative economic data points that’s weakened the pound, but is really good for the large amount of overseas focus companies that are listed in London,” said Daniel Coatsworth, investment analyst at AJ Bell.
However, banks including Barclays, HSBC and Lloyds Banking Group dropped between 0.3 per cent and 2.1 per cent, weighed down by the gloomy data.
Traders expect the Bank of England to hold interest rates next month, but see more cuts coming next year. They now expect about 0.72 per cent of cuts, compared with 0.67 per cent before the release of the data.
Europe
German short-dated government bond yields and the euro tumbled to their lowest levels in around two years on Friday as markets ramped up European Central Bank interest rate cut bets after data showed a sharp decline in euro area business activity. Business activity in the euro zone took a sharp turn for the worse this month as the bloc’s dominant services sector contracted and manufacturing sank deeper into recession, a PMI survey showed on Friday.
France slowed at the sharpest pace since early this year, while Germany’s business activity fell for a fifth month running and at the quickest rate since February. Traders also priced in an ECB deposit facility rate at around 1.80 per cent in July, down from 1.95 per cent before PMI figures.
“Markets are reacting because they think the ECB needs to do more,” said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, adding that he still expects the ECB to cut by 0.25 per cent in December.
New York
The S&P 500 and the Dow hovered at levels seen more than a week ago on Friday, as investors took comfort from data pointing to robust economic activity in the world’s biggest economy.
The domestically focused small-cap Russell 2000 index outperformed large-cap indexes with a 1.3 per cent rise. The index hit a more than one-week high and was set for weekly advances of nearly 4 per cent.
A measure of business activity raced to a 31-month high in November, boosted by hopes for lower interest rates and more business-friendly policies from president-elect Donald Trump’s administration next year.
“It’s the excitement about the deregulation and the Trump activity that will boost economic action, because executives start making moves ahead of things,” said Eric Schiffer chief executive officer at the Patriarch Organization.
However, Mr Schiffer said strong economic data could make the Fed consider a slower pace of monetary policy easing.
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