Draghi comments boost global rally

COMMENTS FROM European Central Bank chief Mario Draghi, speaking at a conference in London, that the ECB would do “whatever it takes – and believe me, it will be enough”, to support the euro, boosted global markets yesterday. Virtually all European bourses ending the session in positive territory and the US market getting off to a strong start from the opening bell.

DUBLIN

THE ISEQ partook of the global rally instigated by Mr Draghi’s remarks, closing up 2.3 per cent on the day. There was some stock-specific news, generated mostly by mergers and acquisitions-related announcements as markets opened.

Glanbia’s announcement that it has acquired US nutritional drinks company Asceptic Solutions for €50 million provided a boost to the stock, as it underlined the company’s commitment to the lucrative global nutritionals industry.

The Irish food company finished up 0.8 per cent on the day at €6.15, having hit highs of €6.217 earlier on in the session.

United Drug also opened the session with an acquisition announcement as it announced the purchase of Stuttgart-based Pharmexx, a sales and marketing outsourcing business, from Celesio. United Drug finished up a half a per cent on the day at €2.11.

DCC received a boost from news that the British Competition Commission had provisionally cleared its acquisitions of certain oil distribution assets previously owned by Total in Britain.

It was a strong performer on the day, finishing up 4.7 per cent at €19.80, though volume was relatively light.

CRH was a relative underperformer, compared to industry peers, adding only nine cents on the day to finish at €14.75.

LONDON

BRITISH STOCKS rebounded from a four-day decline yesterday, on the back of Mr Draghi’s comments. The FTSE 100 Index surged 1.4 per cent, its biggest rally since June 29th.

The gauge had tumbled 3.8 per cent over the past four days amid concern the euro zone’s sovereign-debt crisis is worsening and as a report showed the UK economy shrank for a third quarter.

In the UK, 12 companies in the FTSE 100 reported half-year earnings yesterday. Unilever gained 5.4 per cent after posting second-quarter sales that exceeded analysts’ estimates.

Rolls-Royce jumped 6.7 per cent after reporting first-half profit that beat projections. Royal Dutch Shell dropped 2.3 per cent after saying second-quarter net income fell more than predicted.

British Sky Broadcasting Group added 3.1 per cent to 706.5 pence as the UK’s largest pay-TV broadcaster posted a full-year operating profit that beat analyst projections and said it would buy back £500 million of shares.

Drinks company SABMiller advanced 3.9 per cent to 2,742 pence after the company posted first-quarter sales that rose faster than analysts had forecast.

So-called organic lager volume increased 5 per cent in the three months ended June 30th.

EUROPE

EUROPEAN STOCKS climbed, also halting a four-day sell off, after the markets were reassured by those remarks from Mr Draghi.

The Stoxx Europe 600 Index, which had swung between gains and losses earlier in the day, rose 2.4 per cent in London. The gauge had dropped 4.4 per cent the previous four sessions as a surge in Spanish bond yields above 7 per cent reignited concern that Europe’s debt crisis is yet to be contained.

France’s CAC 40 jumped 4.0 per cent and Germany’s DAX climbed 2.75 per cent. Spain’s Ibex 35 jumped 4.3 per cent, while Italy’s FTSE MIB increased by 4.9 per cent.

A rally in European bank stocks yesterday was led by Banco Santander, which surged by 10 per cent, and UniCredit, which jumped 9.2 per cent.

France Telecom rose 5.9 per cent after the company reported results that topped projections.

NEW YORK

US STOCKS rode a wave of hope yesterday, inspired by Mr Draghi’s comments, ignoring mixed corporate results to focus on the strongest signal yet of the ECB’s intentions to protect the euro zone.

Shares in sectors more sensitive to risks in Europe and economic demand, such as energy-related stocks and industrials, were among the day’s best performers.

Diversified manufacturer 3M rose 2.1 per cent to $90.59 after its results beat estimates.

Zynga ended down 37.5 per cent at $3.17 after hitting an all-time low, a day after the company slashed its profit outlook after fading enthusiasm for its games on Facebook. Facebook ended the regular session down 8.5 per cent at $26.84.

Also during the regular session, Sprint Nextel jumped 20.2 per cent to $4.05 after the company posted earnings. Sales performance this reporting period has lagged earnings. With results in from about half of the SP 500 companies, 65 per cent have beaten analyst earnings estimates but just 41 per cent have beaten on revenue, Thomson Reuters data showed. – (Reuters)