Bernanke stimulus boost to markets
Kenmare Resources gain nearly 7 per cent on Iseq amid mixed results for exploration firms
In his twice-yearly report to Congress on monetary policy, US Federal Reserve chairman Ben Bernanke said the Fed’s bond- buying programme would cease by mid-2014, but stressed the plan was not set in stone. Photograph: Pete Marovich/Bloomberg
US Federal Reserve chairman Ben Bernanke gave a modest boost to stock markets around the world yesterday, by reassuring that the US central bank’s monetary stimulus will only be cut if the economy is strong.
In his twice-yearly report to Congress on monetary policy, Bernanke said the Fed’s bond- buying programme would cease by mid-2014, but stressed the plan was not set in stone.
The comments offered the biggest boost to bank stocks, which have the most direct access to the extra central bank liquidity.
The main mover on the Iseq was mining and exploration company Kenmare Resources, which surged late in the afternoon to close up by 6.96 per cent at €0.29.
Shares at oil and gas exploration company Providence Resources fell to €6.10 at one point in the afternoon, but recovered slightly to close at €6.20, down 3.82 per cent. Petroceltic also experienced losses, falling 2.07 per cent to €1.57, but Tullow Oil gained 1.59 per cent, closing at €12.80.
Paddy Power rose 0.6 per cent to €63.15, but the appointment of former deputy chief executive of Ryanair as an independent non-executive director at the company is expected to have a positive effect on share price.
Also in the black yesterday was Ryanair, up 1.31 per cent to €7.04.
Thanks to gains in the miners and the banks – two of its three biggest sectors – the FTSE 100 closed up 0.2 per cent, nearing six-week highs and recovering from an early dip on Bank of England minutes, which showed policymakers unanimously voted against expanding the bank’s asset-buying programme.
The banking sector, boosted by Mr Bernanke’s comments as well as positive sentiment resulting from strong profits at Bank of America, provided the biggest increase to the FTSE 100 of some 6.8 points.
Thomas Cook closed up 2.7 per cent to 146.5 pence after UBS recommended that investors buy, saying 2013 had provided “an almost perfect environment for tour operators”.
Smiths Group, maker of security scanners, dropped 1 per cent to 1,377 pence. The company predicted that operating profit would fall short of its previous forecast by as much as £15 million for the full-year ending in July.
European stocks rebounded from their biggest drop in more than a week, in response to Mr Bernanke’s announcement that the recovery would determine when the central bank reduced its asset purchases.
ThyssenKrupp climbed 3.4 per cent after Credit Suisse Group said the company may be worth more if it spun off its businesses.
Commerzbank, Germany’s second-biggest lender, fell 1.4 per cent for the worst performance on the benchmark DAX.
BASF, the world’s biggest chemical maker, gained 1.1 per cent to €70.83 and Lanxess was up 1.2 per cent to €47.12. Deutsche Lufthansa, Europe’s second-largest airline, retreated 1.3 per cent to €15.34.
In early US trading, nine of the 10 S&P 500 industry sectors moved higher, led by gains in commodities and health shares. St Jude Medical was one of the S&P 500’s best performers after its profit topped expectations, adding 6.9 per cent to $51.82.
Yahoo shares rose 6.5 per cent to trade at $28.63, their highest price since May 2008. Financial stocks advanced, led by Bank of America, up 1.8 per cent to $14.18, and BNY Mellon, which rose 3.4 per cent to $31.39. – (Additional reporting: Bloomberg/Reuters)