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.