Market rally ends as all eyes on Fed

A STRONG three-day market rally halted yesterday with most European markets ending the session in negative territory, and US markets heading for a lower close ahead of a two-day Federal Reserve meeting

Disappointing results from companies including BP and UBS also weighed on sentiment.

DUBLIN

THE ISEQ index closed down 1 per cent yesterday evening in line with the general European trend.

CRH led the direction of the market, closing down a hefty 4.5 per cent at €14.95 as results from peer company Heidelberg highlighted some of the challenges that may be facing the industry. In London, the Irish-headquartered company dropped by 5.8 per cent – the most since it moved its primary listing to London, last November.

Other construction-related stocks also fell, with Kingspan ending the session 2.5 per cent lower and Grafton shedding 1.4 per cent to €2.78.

Aer Lingus, which reported a 10 per cent rise in revenues in the first half, saw its share price increase by a half a per cent to €1.085.

On the positive side, drinks company CC was the subject of some buying interest according to traders, closing up 1.6 per cent at €3.57. Packaging group Smurfit Kappa also performed well ahead of results today, advancing 2.5 per cent to €6.05.

LONDON

UK STOCKS retreated, paring their second monthly advance, driven down by BP, which reported results that missed estimates.

The oil company lost 4.4 per cent, the most in eight months, after Europe’s second-largest oil company posted a net loss for the second quarter.

Barclays led a retreat in banks, falling 1.5 per cent to 168 pence, Royal Bank of Scotland dropped 3.8 per cent to 213.7 pence, while HSBC, Europe’s largest bank, slid 1.7 per cent to 533.9 pence.

LSL Property Services plunged 13 per cent to 220 pence, the largest drop since 2008, after reporting a loss and saying it plans to sell real estate to help pay for professional indemnity claims stemming from valuations. Vedanta Resources led advancing shares, gaining 5.2 per cent to 976 pence.

EUROPE

EUROPEAN STOCKS fell, even as the Stoxx Europe 600 Index completed its second straight monthly rally, after companies including BP and UBS posted earnings that missed forecasts and investors awaited the outcome of a two-day Federal Reserve meeting.

BP led losses, dropping 4.4 per cent, the most in more than ten months.

Europe’s second-biggest oil company wrote down the value of US assets and said production also dropped, reporting a net loss of $1.4 billion compared with a profit of $5.7 billion a year earlier.

UBS tumbled 5.9 per cent. Switzerland’s biggest bank reported second quarter profit that fell by 58 per cent, missing analysts’ projections, as its investment bank lost money on the Facebook share sale.

Anheuser-Busch retreated 3.2 per cent after reporting a decrease in beer sales.

Bayer advanced after raising its sales and earnings forecasts for the year.

National benchmark indexes retreated in 16 of the 18 western European markets. Germany’s DAX Index added 0.2 per cent, while France’s CAC 40 Index fell 0.6 per cent.

US

US STOCKS were heading for a lower close yesterday, as investors awaited the Federal Reserve’s decision on interest rates.

Coach, the largest luxury handbag maker in the US, tumbled 17 per cent to $50.43 after reporting revenue that trailed analysts’ estimates.

The drop was the biggest since 2001 on a closing basis. Sales at North American stores open at least a year advanced 1.7 per cent, compared with a gain of 10 per cent a year earlier, the company said.

Humana slumped 14 per cent as the provider of Medicare benefits cut its 2012 profit forecast.

However, Apple rose 2.1 per cent as Sanford C Bernstein and Co said it was considering a stock split that could prompt the world’s most valuable company to be added to the Dow Jones Industrial Average.

Valero Energy jumped 5.9 per cent to $27.61. The largest US refiner by processing capacity said second quarter profit rose as access to cheaper crude produced in the US led to a rally in the margin between oil costs and fuel prices. Valero planned to separate its retail business to “unlock value” for its shareholders, it said.

Oil fell for a second day yesterday as speculation that the Federal Reserve will announce additional measures to stimulate the economy declined after US consumer confidence and business activity unexpectedly grew. – (Additional reporting: Bloomberg)