Investors fret over extent of Fed’s taper

After the big moves of Monday, markets experienced some pullback yesterday, especially in Europe where most national benchmarks slipped, albeit by very small amounts. In the US the focus continued to rest on the speed with which the Fed might withdraw from its asset purchase programme.

DUBLIN
Peer company guidance on trade in the US hit a number of global building materials groups including Ireland's own CRH, which closed the day down 1.62 per cent, at €17.63.

The positive effect on the Ryanair share price of its Stansted deal continued to drive the airline's value. It closed at €6.54, a rise of 1.85 per cent.

Aer Lingus, closed at €1.49, a rise of 0.34 per cent.

Bank of Ireland ended the day off 1.84 per cent, at €0.21, with traders saying that recent speculation about a rights issue was feeding into the stock.

Food group Kerry ended the day up 0.8 per cent, on what traders said were decent volumes. It closed at €44.85. Glanbia did even better, closing at €9.77, a rise of 2.84 per cent. Traders said the selling pressure on the stock had taken a rest, allowing for some reversal in recent movement.

Smurfit Kappa closed at €17.11, a rise of 0.88 per cent.

LONDON
Part-nationalised bank Lloyds fell 3.3 per cent to 74.80 pence to make it one of the worst performers, reflecting Britain's sale of a 6 per cent stake in the company at 75 pence per share.

The majority of analysts and investors welcomed the government's move, arguing it marked further progress in Lloyds' recovery, although analysts at Investec kept a "sell" rating on Lloyds and noted the bank's "anaemic" profits.

Investors were also refraining from buying new equity positions as the Fed started a two-day meeting.

Royal Bank of Scotland, which received a £45.5 billion bailout, fell 1.1 per cent to 362.5 pence after the Lloyds sale.

Glencore slid 2.3 per cent to 334.2 pence, contributing the most to the decline in a gauge of UK mining companies. Vedanta Resources retreated 2.1 per cent to 1,158 pence. Evraz retreated 1.6 per cent to 137.7 pence. Barclays downgraded the mining-and-metals company to underweight from equal weight, saying investors are concerned about a lack of free cash flow, high levels of borrowing and exposure to the long-steel market in Russia.

Aviva lost 1.1 per cent to 415.1 pence. Aggreko lost 4.2 per cent to 1,580 pence. Credit Suisse Group AG downgraded the largest provider of mobile power generators to underperform, the equivalent of sell, from neutral.

EUROPE
In Germany, a report showed that investor confidence in Europe's largest economy increased in September to the highest level since April 2010. An index compiled by the ZEW Center for European Economic Research, which aims to predict economic developments six months in advance, rose to 49.6 from 42 in August. That exceeded the median economist projection for a reading of 45.

Continental fell 3.1 per cent to €123 after Schaeffler AG and Schaeffler Verwaltungs GmbH sold a combined stake of 4 per cent in Europe's second-largest maker of auto parts.

Total declined 1.4 per cent to €42.36 as Europe’s third-largest oil explorer posted its biggest drop this month.

US
The dollar retreated and Wall Street advanced as investors took positions before this week's Federal Reserve policy meeting that is expected to start the rolling back of its stimulus programme.

Microsoft rose 0.6 per cent to $33 after the company said it would buy back up to $40 billion of its shares and raise its quarterly dividend by 22 per cent.

Apple, which closed below their 200-day moving average for the first time since August 12th, rose 0.8 per cent to $453.80.– (Additional reporting Reuters, Bloomberg)