Markets finish week on a high on hopes Fed will tone down rate hikes

Global stocks rose on Friday for a second day on hopes that signs of cooling inflation in the United States will mean less aggressive interest rate hikes from the Federal Reserve, an outlook that has the dollar facing its biggest two-day drop in almost 14 years.

Dublin

In Dublin, the Euronext All Share finished the day just 0.57 per cent ahead, held back by the performance of the financials, which finished 3.31 per cent down. All the banks finished in the red, with AIB the worst index performer, finishing 6.5 per cent weaker on €2.852. Bank of Ireland was off just over half a percentage point, as was Permanent TSB.

Among the index heavyweights, Ryanair gave back some of its Thursday gains to close down 1.4 per cent, while Paddy Power parent Flutter was 0.2 per cent weaker.

On the upside, it was a good day for the building materials sector, with Kingspan the best performer on the index as it jumped 7.5 per cent, while CRH was 1.44 per cent stronger. Cardboard manufacturer Smurfit Kappa also ended the week on a high, up 2.7 per cent on the day.

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London

The FTSE 100 started the day on a good footing but slipped into the red by the time the week drew to a close. It was down 0.78 per cent, or 57.3 points, to 7,318.04 points.

The FTSE 250 index fared better, gaining as much as 1.8 per cent Friday to extend a weekly rise to 7.1 per cent, the most in two years, amid hopes that the data could mean softer rate rises ahead for the Federal Reserve. It pulled back slightly to close 1.23 per cent ahead.

It comes as official figures showed the UK economy shrank by 0.2 per cent between July and September – meaning that if it sinks further this year, the nation will have entered a recession. Experts warn that it could be the longest recession in a century, lasting for two years.

In company news, arts and crafts retailer The Works saw its shares slide despite posting stronger sales on the back of a cautious festive outlook. Its shares were down by 5.5 per cent.

Housebuilder Redrow told shareholders that it was buying less land and that the value of private reservations was down on last year. Shares in Redrow fell by 0.38 per cent.

Europe

European markets got off to a strong start, building on Thursday’s US CPI-inspired gains, after China announced it was relaxing some of its Covid quarantine restrictions.

Michael Hewson, chief market analyst at CMC Markets UK, said momentum started to tail off heading into the weekend but the pan-European Stoxx 600 ended fractionally ahead, which was enough to deliver an 11-week high and one of the stronger weekly performances of the year to date.

Troubled German energy group Uniper was the outperformer of the day, bouncing 18 per cent on news that it was seeking buyers for an oil refinery in the United Arab Emirates to raise funds. Dutch tank storage firm Vopak was 15 per cent stronger as it upgraded its full-year outlook.

The German Dax closed 0.56 per cent higher to mark its sixth weekly gain in a row, while the French Cac was up 0.58 per cent.

New York

In the US, the top indices were far less spirited on Friday, after the S&P 500 surged past 4.5 per cent on Thursday. The S&P 500 traded little changed after climbing as much as 0.7 per cent earlier in the day. It was just 0.15 per cent up when European markets closed. In a broadly mixed market, the tech-heavy Nasdaq 100 outperformed, while the blue-chip Dow Jones Industrial Average slipped 0.66 per cent, led lower by healthcare stocks.

Meanwhile, cryptocurrencies resumed a sell-off amid FTX’s deepening woes. In the latest twist in the saga, Sam Bankman-Fried’s crypto empire filed for Chapter 11 bankruptcy in Delaware.

MSCI’s all-country stock index rose 1.53 per cent, lifting it to its highest levels since mid-September, as the market repriced expectations for the Fed’s target rate to peak below 5 per cent, or about 20 basis points lower than recent highs. – Additional reporting: Reuters, PA