Fed rate rise speculation puts equities under pressure

Equities have been under pressure after the European Central Bank said last week that an extension of its stimulus programme had not been discussed, while speculation is swirling about a potential interest rate rise from the US Federal Reserve next week.

DUBLIN

After a quiet August in the markets, dealers said volumes were getting back to normal on Wednesday, which was described by one as a “busier day than recently”. The Iseq Index was strong earlier in the day but gave up some ground to finish down 0.2 per cent.

There was "a bit of action" in Ryanair following its agm. All its stock traded around €12.90 to €13, remaining pretty much unchanged. There was some volume in the Dalata Hotel Group, which was up about 1.5 per cent and traded about one million shares.

The banks were generally a bit weaker. Bank of Ireland and Permanent TSB were down 2 per cent each, with volume at about average. Other major players traded in line with the market.

LONDON

Britain’s top shares index closed slightly higher on Wednesday, breaking a three-day losing run, as firmer mining stocks enabled the market to recover some ground.

The blue-chip FTSE 100 index finished 0.12 per cent firmer, near a one-month low but still up about 7 per cent since the start of 2016. Miners were the best performers, with the UK mining index rising 1.6 per cent.

Luxury goods group Burberry fell 2.1 per cent on the back of cautious updates from rivals such as Hermes and Richemont, with Hermes' shares sliding 8.8 per cent after the company scrapped its sales growth targets.

Shares in EasyJet fell 4.2 per cent, the top decliner in the FTSE 100 index, after Barclays cut its target price for the stock to 1050 pence from 1150 pence. Online grocer Ocado, which is in the FTSE 250 mid-cap index, also fell sharply for the second day after broker downgrades following its warning earlier this week of pressure on its profit margins. Its stock closed 7.6 per cent lower.

EUROPE

European shares ended slightly lower, giving up earlier gains as oil and luxury stocks declined, with

Bayer

closing off its highs after clinching a $66 billion deal to buy

Monsanto

.

German drug and chemical company Bayer finished with a gain of only 0.3 per cent, having been up as much as 4.7 per cent after news of the deal broke.

The $128-a-share deal was cheaper than many analysts expected, with some saying that it would help Bayer to maintain its competitive position.

“We think this increased equity component may disappoint investors, but short-term some relief is likely to be found in the lower than expected price,” Baader Helvea analysts said in a note.

The STOXX 600 closed 0.1 per cent down, ending in slightly negative territory as a sell-off in oil prices intensified, knocking the heavyweight energy sector.

It was a fifth day of losses for European shares, extending recent weakness after markets sold off globally on concern over the effectiveness of central bank policy.

NEW YORK

The US treasury yield curve hit its steepest in more than two months on Wednesday, while stock markets around the world inched higher as Apple shares gained.

Deepening worries over the ability of the world’s major central banks to stimulate growth have triggered a recent rise in bond yields and sparked a bout of risk-off trading.

On Wednesday, the gap between five-year treasury note yields and 30-year bond yields widened as far as 123.40 basis points, the widest since July 1st. Benchmark 10-year treasury notes were last up 5/32 in price to yield 1.72 per cent, from 1.73 per cent on Tuesday.

Vitae Pharmaceuticals shares more than doubled to $20.86 after Allergan said it would buy the company for $639 million. Allergan rose 2.7 per cent. Ford fell 1.5 per cent after the carmaker said next year's financial performance would fall from this year's levels. – (Additional reporting: Reuters)