Equities slip as US treasury debt rises
World equity markets slid and safe-haven US treasury debt rose yesterday as a looming battle in Washington over the administration’s borrowing limit and a recovery in the yen weakened demand for riskier assets.
The Dublin market finished slightly behind its European peers led by index heavyweight CRH, which was down 1.4 per cent at €14.68.
Grafton came under pressure yesterday according to one stockbroker and was the worst performer of the day, closing down 3.9 per cent.
Smurfit Kappa was also under pressure retracing after a phenomenal run above €10. The packaging group declined 1.3 per cent to €9.76.
There were buyers around for the banks, which closed up on good volumes. AIB added 8.3 per cent, while Bank of Ireland closed up 2.96 per cent.
Dragon Oil was also up, rising 1.13 per cent to €6.82.
British blue-chip stocks edged up yesterday after a choppy day as the index managed to consolidate above 6,100, despite testing support with concerns weighing over the US debt ceiling and growth in Europe.
The FTSE 100 twice dipped below the 6,100 level, but recovered both times. The index gained 0.2 per cent, at the close in London, erasing a slide of as much as 0.4 per cent.
Lonmin rallied 4 per cent as platinum climbed.
Burberry Group led blue chip gainers, adding 4.6 percent after the British luxury brand posted a 9 per cent rise in third-quarter underlying revenue.
“Given the concerns surrounding the brand since the profit warning, this acceleration should support sentiment in the shares,” Bank of America Merrill Lynch said in a note, raising its rating to buy from neutral and upgrading its earnings forecasts by up to 4 per cent.
Yesterday’s share price hike in early trade has restored Burberry to levels last seen in September, just before it shed over 20 per cent after issuing a profit warning.
Royal Bank of Scotland fell 2.9 per cent after people familiar with the situation said the lender may pay £500 million in fines.
European stocks were little changed as a report showing weaker-than-forecast German growth offset Spain’s better-than-targeted sale of debt.
IG Group slipped 1.1 per cent after saying first-half net trading revenue fell. SAP sank the most in six months after reporting earnings that trailed estimates.
Air Liquide dropped 1 per cent after Bank of America cut its recommendation on the stock. Hennes and Mauritz advanced 3.6 per cent after posting sales that beat analyst forecasts.
France’s CAC 40 lost 0.3 per cent and Germany’s DAX sank 0.7 per cent.
US stocks rose yesterday, erasing early losses, as chain stores gained after retail sales grew more than forecast and JPMorgan Chase paced a bank rally before reporting earnings.
Treasuries climbed for a third day, pushing yields to near their lowest of the year.
Limited Brands, Abercrombie and Fitch and JC Penney rose at least 2 per cent to pace gains in retailers. Express rallied 24 per cent, the most since its initial public offering in May 2010, after the clothing chain raised its outlook for the fourth quarter and full year 2012.
Microsoft, Caterpillar and JPMorgan climbed more than 1 per cent. Nineteen of the 24 banks in the KBW index rose, with SunTrust Banks surging 2.9 per cent to lead gains.
Facebook slipped 2.7 per cent after it introduced a tool for searching information posted to its social network of more than 1 billion users.
While chief executive Mark Zuckerberg said the new feature could be a “business” in the future, he did not outline how it would make money soon, weighing on Facebook shares.
Dell climbed 7.2 per cent following a 13 per cent jump on Monday. – Additional reporting: Bloomberg, Reuters