Global surge follows Fed bond-buying
LEADING EUROPEAN markets reached their highest point for six months after the US Federal Reserve announced it was going to buy $40 billion (€30.5 billion) worth of mortgage-backed securities a month until it sees improvement in its weak jobs market.
The move follows last week’s ECB pledge to buy bonds issued by troubled euro zone states.
GLOBAL PACKAGING group Smurfit Kappa climbed more than 13 per cent on the Dublin market on the back of a large order from a single buyer. The firm ended the day 13.09 per cent up at €7.95. More than five million of its shares changed hands – about 2.5 per cent of the company. Dealers said one big buyer accounted for a portion of the higher than normal volumes.
Elsewhere, the Irish market clearly benefited from the Fed’s announcement, with most of the leading stocks gaining ground.
Iseq heavyweight, building materials giant CRH, which accounts for about one third of the index, added 1.85 per cent to €15.705.
The news from the US, which accounts for more than half of CRH profits, sparked renewed interest in the stock.
DIY and builders’ merchant Grafton added 5.15 per cent to close at €3.449. Titanium miner Kenmare Resources benefited from a general plunge on mining stocks in Europe, jumping 7.2 per cent to 53.9 cent.
THE FED move and good news from Australia on the resources front boosted stocks in London.
The benchmark FTSE 100 rose 95.63 points, or 1.6 per cent, to 5,915.55 at the close, the highest level since March 19th. The index has gained 2.1 per cent this week and 12 per cent since its 2012 low on June 1st. Volumes yesterday were 84 per cent ahead of the average for the last 30 days.
Mining stocks forged ahead after Australia’s treasurer Wayne Swan told a conference that the country’s resource boom looked set to continue and investment in mining and energy stocks still had some way to run.
Rio Tinto surged 6.6 per cent to 3,281.5 pence and BHP gained 6 per cent to 2,049 pence.
Australia’s highest court yesterday struck down previous orders by a tribunal that had ruled that BHP and Rio should share access to their railroads with Fortescue Metals Group Ltd, returning the dispute to the Australian Competition Tribunal.
Anglo American jumped 9.2 per cent to 2,084 pence and Xstrata plc climbed 6.8 per cent to 1,060.5 pence.
Lonmin rose 5 per cent to 614.5 pence. The third-largest platinum producer by volume has resumed talks in South Africa to end an illegal strike that has spread to nearby mines.
Petropavlovsk, a miner of gold in Russia, jumped 15 per cent to 433.9 pence. Antofagasta, which owns copper mines in Chile, rose 7.8 per cent to 1,334 pence, its biggest rally in nine months, as metal prices jumped in London.
Evraz, the mining company and steelmaker partly owned by billionaire Roman Abramovich, soared 13 per cent to 293.7 pence. Vedanta Resources surged 13 per cent to 1,090 pence.
THE STOXX Europe 600 Index, which tracks leading shares in 18 European markets, advanced 1.3 per cent to 275.95 at the close, its highest level since June 1st 2011. The equity benchmark has rallied 18 per cent from this year’s low on June 4th and gained 1.3 per cent this week.
The increase mirrored what was happening in key European markets. Germany’s DAX Index added 1.39 per cent and France’s CAC 40 Index advanced 2.27 per cent.
Nyrstar, the largest producer of refined zinc, soared 11 per cent to €5.30. The preferred shares of Volkswagen added 4.9 per cent to €152.50. Europe’s largest carmaker said sales in August rose 19 per cent to 719,500 vehicles.
Opap sank 17 per cent to €5.19, the biggest decline on the Stoxx 600. The shares dropped the most since the Greek state first sold shares in the company in 2001. Kathimerini reported the European Commission may ask the government to immediately increase the company’s tax rate to adhere to EU regulations. Greece had proposed to gradually raise the tax to 30 per cent by 2020.
The volume of shares changing hands on the Stoxx 600 was 71 per cent greater than the average of the last 30 days, according to data compiled by Bloomberg.
US STOCKS rose after the Standard Poor’s 500 Index climbed to its highest level since 2007, as markets rallied around the world on the Fed’s bond-purchase programme. The index advanced 0.3 per cent to 1,464.18 at 1.45pm New York time.
Alcoa, the largest US aluminium producer, gained 2.2 per cent to $9.84. Exxon, the world’s biggest oil firm, added 0.8 per cent to $91.95, the highest intraday since May 2008. Bank of America, the second-largest US bank by assets, rose 1.3 per cent to $9.52. iPhone and iPad maker Apple climbed 1.7 per cent to a record $694.26.