German stocks recover as concerns ease

The fall in the value of German shares over concerns over the fighting in Ukraine, has gone too far, investors appear to have decided yesterday, leading to recovery in the Dax.

Speculation that the European Central Bank might move towards quantative easing contributed to a growing gap between the yields on US Treasury notes and German bunds, with the difference increasing to as much as 1.45 percentage points.

The London Stock exchange was closed due to a holiday there.

DUBLIN

The Dublin Stock Exchange had a slow day. CRH, about which there has been some speculation that it might fall out of the Euro Stoxx 500 to make way for Nokia, had a good day, with 850,000 shares changing hands, and the price ending the day at €17.65, a rise of 2.35 per cent.

Other than that there were few share price movements of note. The Iseq index rose 0.65 per cent, to close at 4,722.53.

Although it was a slow day on the exchange, it is due to be a busy week, with Kingspan, FBD and UTV all due to release results today, Grafton on Wednesday, Paddy Power and Irish Continental on Thursday, and IFG on Friday.

EUROPE

European shares rose as prospects of new stimulus measures from the European Central Bank enabled the region’s stock markets to shrug off weak German data and the resignation of the French government.

ECB president Mario Draghi, speaking at a global central banking conference in Jackson Hole, Wyoming, late on Friday, said that the ECB was prepared to respond with all its “available“ tools should inflation drop further.

His comments helped offset negative pressures from weak German Ifo economic data, which showed that German business sentiment dropped for a fourth straight month in August, and from the French government’s resignation.

The euro zone’s blue-chip Euro Stoxx 50 index closed up by 2.2 per cent at 3,165.47 points.

Germany’s DAX – which remains down by about 5.4 per cent from an all-time high of 10,050.98 points set in late June – also rose 1.8 per cent to 9,510.14 points.

France’s CAC finished 2.1 per cent higher, with some investors saying that a stronger and more unified French government might emerge that was more committed to French president Francois Hollande’s deficit-cutting measures.

NEW YORK

US stocks rose, sending the Standard and Poor’s 500 Index above 2,000 for the first time, on signs of more corporate takeovers and stimulus for the European economy.

Morgan Stanley added 3.1 per cent to $34.52 for the biggest gain in the SandP. JPMorgan Chase advanced 2.2 per cent to $59.79 for the biggest increase in the Dow.

Burger King, the burger chain that is majority-owned by 3G Capital, added 16 per cent to $31.50 while US shares of Canada’s Tim Hortons jumped 19 per cent to $75.01 on news that Burger King would create the world’s third-largest fast- food chain by merging with Canada’s bigger seller of coffee and doughnuts. Canada’s corporate tax rate is 26.5 per cent, compared with 40 per cent in the US, according to KPMG.

InterMune surged 36 per cent to $72.99. Roche will buy the unprofitable company that’s awaiting US approval of its biggest drug, for $74 a share, the Swiss-based company said in a statement.

Ann Inc, the owner of the Ann Taylor chain, rose 6 per cent to $39.78, the highest in six weeks. The company could be valued at $50 to $55 a share to a potential acquirer, according to investment firms Engine Capital LP and Red Alder LLC.

The S&P 500 rallied 0.6 per cent to a record 2,001.12 at 12:05pm in New York. The Dow Jones Industrial Average increased 107.79 points, or 0.6 per cent, to 17,109.01. The Nasdaq Composite Index advanced 0.6 percent to 4,566.61. - (Additional reporting: Bloomberg, Reuters)