Markets

European stocks decline for third day, but New York makes gains

Plunge for outsourcer Capita weighs on London market, while Boeing boosts Wall St

Boeing forecast a rise in core profits. Photograph: Reuters

Wed Jan 31 2018 - 19:16

European stocks fell at the end of a choppy day in which sellers prevailed, sending the Stoxx 600 benchmark down for a third straight day to its lowest level in nearly four weeks, while outsourcer Capita plummeted after a profit warning, dragging London down.

However, Wall Street stocks gained in early trading, pulling out of a two-day dive yesterday, as Boeing’s strong results and outlook revived enthusiasm over corporate profits, while the dollar was pressured ahead of the Federal Reserve’s first policy decision of the year.

DUBLIN The Iseq slipped just 0.2 per cent on a relatively busy day of trading, as gains for a number of stocks offset a 1.8 per cent decline for building materials group CRH, which closed at €29.92.

Insulation-maker Kingspan rose 3 per cent to €37.20 after analysts at Davy Research upgraded its price target for the stock to €45.50.

The real estate investment trusts Green Reit and Hibernia Reit were among the climbers, rising 1.3 per cent to €1.59 and 2.8 per cent to €1.53 respectively, while Ires Reit was up 1.5 per cent at €1.50. Cairn Homes also made gains, closing up almost 1.7 per cent at €1.95. Kerry, Glanbia and Paddy Power Betfair all rose, the last by 0.7 per cent on the back of an upgrade from broker Investec from "hold" to "buy" and a price target increase from HSBC. Ryanair finished up 2.1 per cent at €16.67. However, Bank of Ireland, Permanent TSB and paper and packaging group Smurfit Kappa all slipped.

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LONDON The FTSE 100 fell

as the headlines were dominated by mid-cap outsourcer Capita. The index ended January down 2.1 per cent after falling 0.7 per cent on the day to its lowest level since December 21st.

Shares in the FTSE 250-listed Capita tumbled by 47 per cent, its biggest one-day loss, after it issued a profit warning, suspended its dividend and announced a rights issue. In the wake of the collapse of fellow outsourcer Carillion, investors were understandably jittery at the news. Shares in utility SSE were among the top gainers on the FTSE 100, climbing by 1.1 per cent after the electricity and gas supplier raised its full-year profit outlook.

EUROPE The Stoxx 600 dipped 0.2 per cent

, although the pan-European index still managed to end January up 2.1 per cent for the month as the rally seen in the first part of the year was only in part offset by the recent bond market jitters and concerns over a rising euro.

Ericsson sank 9.2 per cent after the telecoms equipment maker reported a deeper than expected loss and said the Chinese market would continue to decline. Debt collector Intrum Justitia tumbled by 8.9 per cent after its fourth-quarter revenue and earnings missed expectations.

Shares in fashion retailer H&M fell 10.6 per cent after fourth-quarter profit and profit margins fell and the company said it would open far fewer stores in 2018.

NEW YORK The dollar edged higher and world stocks lost the shine they took from Boeing’s strong earnings report after the Federal Reserve indicated more interest rate hikes were in store. Market reaction to a statement from Fed policy-makers was mostly muted, but stocks turned lower after the yield on the 10-year US Treasury note - the benchmark for world lending – briefly shot up to 2.75 percent, a level last seen in April 2014.

On Wall Street, the Dow Jones Industrial Average rose 1.94 points, or 0.01 per cent, to 26,078.83. The S&P 500 lost 6.34 points, or 0.22 per cent, to 2,816.09 and the Nasdaq Composite dropped 12.52 points, or 0.17 per cent, to 7,389.96.

Boeing Co provided the most upside to the benchmark S&P 500 stock index and MSCI's all-country world index. Boeing forecast core profit would rise to $13.80 to $14.00 a share this year, well ahead of analysts' average estimate of $11.96. – Additional reporting: Bloomberg / Reuters.

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