Bonds rise as spectre of rate rise looms

Stock markets around the world fell and bond yields rose as investors weighed the implications that a US interest rate rise before the end of the year would have for the global economy and markets.

European stocks trimmed their best monthly rally since 2009 after Deutsche Bank and Barclays posted disappointing earnings and miners tumbled.

DUBLIN

The ISEQ index closed down 0.72 per cent or 46.3 points at 6,400 yesterday, in line with its European peers.

Guidance from Air France and Lufthansa, which warned of more cost-cutting, weighed on the airline sector including Ryanair. The airline fell 2.4 per cent to €13.40.

CRH was down on the back of Saint Gobain results, falling 1.1 per cent to €24.61.

Bank of Ireland is under pressure still, with shares continuing to trend weaker. The stock fell 2.02 per cent to 33 cent.

C&C fell almost 1.1 per cent to €3.60 after being downgraded by Société Générale.

Kingspan was quite strong, as was Kerry. Kingspan rose 1.4 per cent to €21.90, while Kerry was up 1.8 per cent to €73.85.

LONDON

The London market fell yesterday, weighed by disappointing results from Barclays and Royal Dutch Shell.

Britain’s top share index, the FTSE 100, fell 0.7 per cent at the close, while the broader FTSE All-Share Index retreated 0.6 per cent

Barclays slid 6.3 per cent after cutting its 2016 profitability target and saying it doesn’t expect charges of misconduct to drop any time soon.

Standard Chartered lost 2.7 per cent after insiders said it has held discussions with bankers to raise at least $4 billion of capital.

BHP Billiton and Glencore slid 4 per cent, following metal prices down.

EUROPE

European stocks fluctuated before closing little changed as investors parsed mixed earnings reports, with miners sliding as the increased possibility of a Federal Reserve interest rate rise in December weighed on commodity prices.

Air France-KLM Group slid 5 per cent and Deutsche Lufthansa lost 8.4 per cent amid investor concern that strong earnings growth at the carriers could undermine efforts to push through restructuring plans with workers.

Bayer rose 2.1 per cent after reporting better-than-expected profit.

Nokia surged 10 per cent after announcing plans to return €4 billion to shareholders in dividends and buybacks, while moving forward a target for savings from the takeover of Alcatel-Lucent, which also added 10 per cent.

The Stoxx 600 retreated less than 0.1 per cent to 375.7 at the close of trading, after earlier falling as much as 0.6 per cent and rising 0.4 per cent. France’s Cac 40 and Germany’s DAX were both down around 0.5 per cent.

NEW YORK

US stocks eased yesterday after the Federal Reserve rekindled expectations of an interest-rate hike in December and data suggested the economy was ready.

Allergan’s shares shot up 7.9 per cent to $310.01 after the Botox maker confirmed it was in buyout talks with Pfizer. Pfizer was down 2.2 per cent in early trading

GoPro slumped 13.5 per cent to $26.11 after the action camera maker posted disappointing results.

NXP Semiconductors sank 18.2 per cent to $74.34 after its bleak forecast.

The slide took down other chipmakers, with the broader semiconductor index down 2.8 per cent.

At 12:19, the Dow Jones industrial average was down 46.13 points, or 0.26 per cent, at 17,733.39, the S&P 500 was down 2.62 points, or 0.13 per cent, at 2,087.73 and the Nasdaq Composite index was down 17.15 points, or 0.34 per cent, at 5,078.54.

– (Additional reporting: Bloomberg, Reuters)