Markets remain in positive territory

TRADERS DESCRIBED yesterday as a good and strong day for equities, with most European markets ending up around 1 per cent.

They said the pattern over recent times has been for post-EU summit bounces to dissipate in the short period thereafter and the fact that markets have remained in positive territory to date post the latest EU summit is a positive development.

Irish bond rates are still well down on pre-summit levels, with nine-year bonds remaining in the 6.2 per cent region.

Expectations for a further round of stimulus from global central banks also contributed to the positive mood.

Volumes were not huge during the day, due in part to the fact that today is Independence Day in the US.

Banking once again provided the focus for news, and once again for all the wrong reasons.

DUBLIN

THE ISEQ closed at 3,189.31, a rise of 0.88 per cent. Bank of Ireland gave up some of its gains of recent times and closed the day at €0.106, a fall of 00.94 per cent.

CRH also held on its gains of recent days, closing at €15.50, a rise of 1.04 per cent.

The airlines both held up well, with Aer Lingus closing at €1.04, an increase of 1.36 per cent, and Ryanair gaining 2.18 per cent to close at €4.02.

Grafton and Glanbia had good days. The building materials group closed at €2.96, a rise of 4.59 per cent, while the food group closed at €6, an increase of 1.70 per cent.

LONDON

THE BIG news of the day in London was the resignation of Bob Diamond from his role as chief executive of Barclays as a result of the Libor interest rate fixing scandal. The bank closed down 1.1 per cent at 166.5p. The shares are down more than 15 per cent from Thursday’s open.

Barclays saw some of the heaviest volumes yesterday, with more than double the usual number of shares traded.

Britain’s top share index hit a two-month high, although traders said the rally could be short-lived and the market may face downward pressure starting next week as the root problems of the euro debt crisis has not been eliminated.

UK trading volumes remained relatively thin at 83 per cent of the 90-day daily average. Today’s US holiday followed by tomorrow’s European Central Bank and Bank of England meetings meant investors were reluctant to take new positions.

The Bank of England is widely expected to launch a third round of gilt purchases tomorrow, while the ECB will likely cut interest rates to 0.75 per cent from 1.0 per cent.

Miners led blue chip gainers, bolstered by prospects of rising global demand for resources on the back of central banks’ monetary easing. The top performer was Vedanta Resources, surging 6.1 per cent.

RBS, which is also being investigated in the Libor scandal, lost 1.1 per cent.

EUROPE

EUROPEAN SHARES also closed at a two-month high, led by gains in ArcelorMittal and other commodity stocks and supported by expectations that policymakers will take further steps to tackle the region’s debt crisis.

The FTSEurofirst 300 index rose 1 per cent to 1,046.11 points, its highest closing level since it ended at 1,048.07 points on May 1st. The Eurostoxx 50 index rose 1.2 per cent to 2,320.43 points, marking its highest close since April 27th.

Peugeot Citroen added 3.7 per cent as a union official said the carmaker would eliminate more jobs this year than it had announced.

Argan jumped 9.3 per cent to €10.82 after the French warehouse owner said second-quarter rental income climbed 15 per cent to €12.4 million.

Steelmaker ArcelorMittal gained 5.6 per cent, boosted by an upgrade from broker Kepler.

Commodity stocks have rallied since last Friday’s EU summit on hopes that moves to counter Europe’s debt crisis could help the overall global economy, thereby strengthening demand for their products.

US

US STOCKS extended a rally for a third day as sharp gains in oil prices lifted energy shares and a rise in the euro pointed to a less risk-averse environment.

The SP’s energy sector was the top gainer, up 1.8 per cent.

Major automakers also posted stronger-than-expected sales gains in June. Ford gained 2.2 per cent to $9.60, while General Motors rose 5.6 per cent to $20.67.

Facebook climbed 1.4 per cent as General Motors was said to be talking with the largest social-networking company about resuming advertising.

The US justice department is probing Chesapeake Energy and Encana for possible collusion after a Reuters report showed that top executives of the two rivals plotted in 2010 to avoid bidding against each other in Michigan land deals, a source close to the probe said. Chesapeake shares were up 2.1 per cent at $19.12. – (Additional reporting: Reuters)