Stocks rebound from five-day slide as US economy recovers

Stocks rebounded from a five-day slide after US Federal Reserve chairman Jerome Powell reassured investors the central bank would tamp down inflation as the economy continued its rebound.

Dublin

Euronext Dublin finished the day up 0.5 per cent as the banks enjoyed a bounce on the back of comments from Mr Powell that rates could be raised.

The main movers were Permanent TSB, which was up 3.7 per cent, while AIB ended the day up 2.25 per cent. Elsewhere among the financial names, FBD Insurance ended the day 2.5 per cent stronger.

“The rate environment stemming from the US and talk of raising rates has certainly been pushing the banks over recent days,” noted a trader.

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Paddy Power Betfair owner Flutter Entertainment finished the day up 2 per cent. “Momentum has been building in the stock since the start of the year,” said a trader. “They have benefited from new markets opening up in the United States like New York.”

Homebuilder Glenveagh Properties was up 1.5 per cent following strong housing data earlier this week. Elsewhere, building materials group CRH was also up 1 per cent. “That was on the back of the stimulus Bill in the US and the infrastructure spend,” said a trader.

On the downside, Kerry Group ended the day down 1 per cent.

London

The rise in London was led by major fashion retailers Next and JD Sports, as well as by mining companies and gambling firms. It helped the blue-chip FTSE 100 index rise by 46.12 points, or 0.6 per cent.

Elsewhere, shares in Games Workshop dipped by 10.9 per cent when it said that profits had fallen in the last six months. The business said sales had grown, but that its costs were going up due to increased prices for freight, warehouses and logistics. It also took a £15 million hit from VAT receipts following Brexit.

The biggest risers on the FTSE 100 were Scottish Mortgage Investment Trust, up 57p to 1,196p, Next, up 346p to 8,000p, Dechra Pharmaceuticals, up 146p to 4,446p, JD Sports, up 6p to 218.8p, and Fresnillo, up 20.8p to 336.6p.

Europe

Investors venturing back into tech shares along with upbeat expectations for the fourth-quarter earnings season led European stocks to recover after fears of rising rates drove heavy losses in recent sessions.

The pan-European Stoxx 600 closed 0.8 per cent higher, recovering from its worst day in six weeks. Technology stocks were the best performers for the day, adding 1.9 per cent after tumbling nearly 8 per cent over the past seven sessions.

Italy’s second-largest bank, UniCredit, fell 1.1 per cent after reports that it was interested in bidding for Russia’s Otkritie Bank.

HelloFresh gained 1 per cent after the German meal-kit delivery firm announced a share buyback of up to €250 million.

Construction chemicals maker Sika climbed 2.9 per cent after reporting a 17.3 per cent rise in 2021 sales, boosted by acquisitions and an upturn in the building industry.

Meanwhile, Deutsche Bank slipped 0.5 per cent after US financial investor Cerberus, which has favoured a merger of the bank and Commerzbank, divested a large chunk of its holdings in the top two German lenders.

New York

US stocks deepened losses after the Fed’s Jerome Powell said the central bank was likely to raise interest rates this year, remarks that tempered demand for risky assets and lifted bond yields.

The Dow Jones Industrial Average fell 0.57 per cent, the S&P 500 lost 0.52 per cent, and the Nasdaq Composite dropped 0.41 per cent.

Megacap growth companies including Apple, Amazon.com, Microsoft and Meta Platforms were mixed in early trading.

Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co, called the recent pullback in riskier assets “arguably overdone” and said it presented investors with a buying opportunity.

International Business Machines dropped 4.5 per cent after UBS downgraded the stock to “sell” and slashed its price target. – Additional reporting: agencies