Investors unconvinced by US debt deal
European stocks rally at close of trading, but concerns remain about division in Congress
Ryanair climbed 1.8 per cent to €6.28 as shareholders responded warmly to its indication that it will launch new Irish routes. Photograph: Alan Betson/The Irish Times
European stocks spent most of the day in decline, but a rally in the final half hour of trading helped erase earlier losses, leaving the Stoxx Europe 600 Index at a five-year high. US equities rebounded after Congress agreed to extend the US government’s debt limit.
However, European markets spent much of the day in negative territory on disappointment over the US last-minute debt deal, which secured funding only until January 15th, raising the likelihood of another round of political brinkmanship. Republicans and Democrats didn’t resolve any of their long-term divides on fiscal policy and will have to return to the same issues over the next four months.
Meanwhile, Beijing-based Dagong downgraded the US government’s local and foreign-currency credit ratings to A- from A, maintaining a negative outlook.
Bank of Ireland was the most-traded stock on a mixed day for the Iseq, with its shares rising 3.5 per cent to 26 cent. This extended a strong run for the stock of late, which was helped by a broker note on Wednesday that suggested it may not need to raise further money. Building materials group CRH weakened as the session progressed, dropping 2.4 per cent to €18.17.
Ryanair climbed 1.8 per cent to €6.28, as shareholders responded warmly to its indication that it will, in light of the abolition of the air travel tax, launch new Irish routes – routes from Irish airports are considered by investors to be more profitable for the group than others, although the airline does not break down profits by route.
There were gains for Aer Lingus, Kerry and Paddy Power, but the “star performer” of the day, according to one broker, was Independent News & Media, which rose 9.5 per cent to 9 cent.
Britain’s top share index ended slightly higher, helped by a surge in media group BSkyB , although investors were underwhelmed by a temporary fix to the debt issues in the US. The FTSE 100 index closed up by 0.1 per cent to mark its sixth straight session of gains.
BSkyB was the top blue-chip winner, jumping 7.1 per cent to 940 pence, its highest level since early 2001 after posting an increase in revenue and announcing that it had added 111,000 new broadband customers in the three months through September.
SABMiller gained 4.2 per cent to 3,167 pence after the brewer of Peroni said lager volumes climbed 1 per cent in the six months through September. Analysts had predicted no growth, according to the median estimate.
National benchmark indexes finished up in 10 of the 18 western-European markets, but France’s CAC 40 dropped 0.1 per cent and Germany’s DAX declined 0.4 per cent.
Carrefour added 3.1 per cent to €27.64, its highest price since May 2011. France’s biggest retailer said sales at its domestic hypermarkets open at least a year climbed 1.9 per cent in the third quarter, the first growth since the second quarter of 2011.
Pump manufacturer Sulzer fell 4.4 per cent to 132.20 Swiss francs after predicting that 2013 sales will probably not exceed the 4.02 billion francs generated in 2012.
The Standard and Poor’s 500 Index rose above its record closing level and Treasuries rallied as the US raised the debt ceiling, but IBM and Goldman Sachs led the Dow Jones Industrial Average lower, while the dollar weakened. Analysts also forecast that the Federal Reserve will postpone tapering its bond purchases as a result of the debt-ceiling debate.
IBM tumbled 6.5 per cent to a two-year low after it reported a sixth straight quarter of falling sales and its hardware business posted a loss, while Goldman Sachs retreated 2.7 per cent after it said its revenues had dropped 20 per cent. – (Additional reporting: Bloomberg / Reuters)