Markets fall on increased speculation of US rate rise

European stocks fell amid growing speculation that the Federal Reserve will raise interest rates as soon as next month.The Stoxx Europe 600 Index retreated 0.2 per cent to 343.2 at the close of trading, after slowly paring earlier declines of as much as 0.7 per cent. London was closed due to a bank holiday.

A gauge of carmakers posted the biggest drop, while sliding oil prices dragged energy producers lower. The volume of shares changing hands was 72 per cent lower than the 30-day average as UK markets were closed for a holiday.

Fed vice chairman Stanley Fischer indicated that a tightening is possible at the next review, sending US equities lower.

The probability of a September rate hike has jumped to 42 per cent, with odds for a December move now at 65 per cent. European equities have oscillated between weekly gains and losses all month, with the Stoxx 600 trading in a tight range and struggling to find a direction after a rebound of as much as 12 per cent following the aftermath of Britain’s secession vote.

DUBLIN

The Iseq was up marginally at 6,214, bucking downward trends elsewhere.

Bank of Ireland was down 1 per cent at 18.9 cents on thin trading volumes. Paddy Power Betfair had a tough afternoon, down more than 2 per cent at €110, after results last week highlighted the costs associated with the recent merger.

Dalata, the hotel group run by former Jurys boss Pat McCann, was flat at €4.30.

Insulation maker Kingspan was up 0.5 per cent at €25.51.

Food companies Kerry and Glanbia both enjoyed a good day trading up 1 per cent and 0.5 per cent at €78.83 and €17.40 respectively.

Ryanair was up 1 per cent at €12.11 tracking the general shift in airline stocks.

CRH was up 1.2 per cent at €30.20 on steady volumes while Smurfit Kappa was down marginally at €22.61.

EUROPE

Germany's Dax was 0.7 per cent lower, while the blue-chip Euro Stoxx 50 was down 0.4 per cent. Among stocks moving on corporate news today, Alstom climbed 2.9 per cent after winning a contract to design and build new high-speed trains for Amtrak. Banca Monte dei Paschi di Siena rose 1.3 per cent after a person with knowledge of the matter said the Italian lender is considering using a debt-for-equity offer as a way to reduce the size of its planned €5 billion rights issue.

NEW YORK

Wall Street snapped a three-day losing streak on Monday as financial stocks rose after Federal Reserve chair Janet Yellen said the case for an interest rate hike had strengthened.

Ms Yellen, addressing a gathering of global central bankers on Friday, said the central bank was close to meeting its goals of maximum employment and stable prices, while describing consumer spending as “solid”.

The S&P 500 financial index was trading at its highest level since December 17th, a day after the US central bank raised interest rates for the first time in nearly a decade.

Gains in the sector outperformed the other nine major S&P 500 indexes that were also trading higher. Wells Fargo rose 2.5 per cent and provided the biggest boost to the S&P, while JPMorgan and Bank of America rose about 1.1 per cent. Goldman Sachs' 1.1 per cent gain made it the top influence and the biggest gainer on the Dow.

Investors will turn their focus to a slew of US data this week before the all-important jobs report on Friday. Among the releases to be scrutinised will be US consumer confidence for August, due on Tuesday, while productivity, manufacturing and construction figures are due on Thursday.

Global factory activity surveys will also be released on Thursday. In commodities, crude prices fell on the back of a rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels.

– (Reuters/Bloomberg)