Markets

European equities rally after US Fed retains status quo

Interest rates unchanged but monetary policy may be tightened if more jobs are created

Traders on the of the New York Stock Exchange: European markets had to wait until Thursday’s session for investors’ reaction to the US Fed’s announcement that rates would remain unchanged. Photograph: Drew Angerer/Getty Images

Thu Sep 22 2016 - 20:10

European equities were buoyed by a rally across global stock markets following the Federal Reserve’s decision to keep US interest rates on hold. Its announcement on Wednesday came after the close of European markets meaning Thursday’s session was the first chance for investors to react to the announcement.

The Fed left interest rates unchanged and projected a less aggressive path for interest rate increases next year and in 2018. However, it signalled it still might tighten monetary policy by the end of this year as the labour market improved.

The consensus among economists is for a move in December as the Fed’s November meeting comes just ahead of the US presidential elections.

DUBLIN

The Iseq index climbed 1 per cent, as equities rose across Europe.

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CRH

, the largest stock on the Dublin market, advanced 2.2 per cent, with the cement-maker closing at a price of €30.07.

Ryanair's sluggish week continued with marginal gains taking it up to €12.70, while paper and packaging group Smurfit Kappa went against the generally positive trend by declining 2.4 per cent to €21.34.

Kerry Group fell 0.6 per cent to €74.48, while the Green Real Estate Investment Trust (Reit) advanced 0.75 per cent to €1.49. Building materials group Kingspan advanced 1.2 per cent to €24.90, while Paddy Power Betfair rose 1.9 per cent to €105.30.

Food group Aryzta, which has its primary listing in Zurich, rose 1.65 per cent to €36.60. The company, which publishes its full-year results on Monday, announced that Gary McGann is to join its board as chairman.

LONDON

The FTSE 100 rose on Thursday, inching back towards its highest level of the year. The blue-chip index closed up 1.1 per cent at 6,911.40 points, edging nearer to its 2016 peak of 6,955 points reached in August.

Mining shares were the top-performing FTSE stocks, led by Glencore which finished up 5.5 per cent as the Fed's decision pushed down the US dollar, making commodities cheaper for holders of other currencies. Fresnillo, Randgold and Antofagasta also rose.

Rolls-Royce shares fell 7 pence to 733 pence after the company announced the departure of chief financial office David Smith. He will be replaced by Stephen Daintith, currently the finance chief at Daily Mail & General Trust.

EUROPE

The pan-European STOXX 600 index rose for a second straight session and ended up 1.6 per cent. In Germany, the Dax closed 2.3 per cent higher, mirroring the 2.3 per cent rise by the Cac 40 in Paris.

Mining stocks led markets higher as the Fed’s decision to keep rates unchanged pushed down the US dollar on currency markets, thereby making commodities cheaper for holders of other currencies.

The STOXX Europe 600 Basic Resources index rose 3.9 per cent after hitting its highest level since August 2015.

Energy shares were also in demand after oil prices also rose on a weaker dollar, extending gains from the previous session when a surprise third consecutive weekly US crude inventory draw tightened supply.

The European oil and gas index rose 2.4 per cent. However, French utility giant EDF inched 0.4 per cent higher, underperforming the market it said it was cutting its 2016 earnings expectations due to lower output.

Banco BPI rose 3.6 per cent after Spain's Caixabank launched a bid for the Portuguese lender and slightly raised its offer price. Caixabank shares fell 3.1 per cent.

NEW YORK

Wall Street marched higher on Thursday, with the Nasdaq hitting a record intraday high, as investors cheered the Federal Reserve’s decision to not raise interest rates.

In early trading, the three indexes – the S&P 500, the Nasdaq and the Dow Jones – were all on track to mark their third consecutive day of gains.

Technology stocks advanced. Shares in Amazon rose 1.9 per cent to $804.86, after hitting a record following a price target raise by BMO. The stock gave the S&P 500 and the Nasdaq their biggest boost.

Apple rose 0.9 per cent to $114.56 after analysts at Nomura and RBC raised their price targets. Weyerhaeuser was the top percentage gainer on the S&P, rising 5.1 per cent to $31.88 after Goldman Sachs initiated coverage of the real estate investment trust with a "buy" rating.

– (Additional reporting: Bloomberg / Reuters)

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