US investors ignore Obama victory
Markets were in no mood to celebrate Barack Obama’s victory yesterday, with concerns about the “fiscal cliff” in the US at the forefront of investors’ minds once more.
In Europe, the European Commission provided its own dampener by cutting its forecasts for economic growth in the euro zone.
The Commission is now expecting 0.1 per cent expansion next year, down from an earlier prediction of 1 per cent. Crucially, it cut Germany’s growth forecast from 1.7 per cent to 0.8 per cent, helping to punish the euro against the dollar.
The Irish market held up reasonably well in the circumstances, although a 3.37 per cent drop in CRH, from €15.005 to €14.50, added to external pressure. The market was down 1.46 per cent at the close.
CRH, which is due to update the market next Tuesday, suffered after Holcim, its Swiss peer, missed analysts’ expectations and was also hit by lacklustre news from the Polish construction market.
Glanbia had a positive day after telling investors its results would be at the higher end of expectations. The food group closed 15 cent stronger at €7.85.
Smurfit Kappa also provided some good news, posting earnings ahead of expectations. The stock lost some momentum however after five directors, including group chief executive Gary McGann and chief operations officer Tony Smurfit, exercised share options and then sold the shares at a profit. Mr Smurfit also bought a block of 50,000 shares at €8.44, while the stock closed 24 cent weaker at €8.30.
Aer Lingus weakened along with its European sector, despite reporting a strong third quarter. Shares in the airline, which remains a Ryanair takeover target, closed 1.5 cent weaker at €1.095.
Ryanair was solid amid the general gloom, continuing to win friends after Tuesday’s positive numbers. Its shares outperformed the market, adding 0.14 per cent to finish at €4.90.
C&C was busy as it added 1 cent to reach €3.90.
UK stocks were also hit by the European Commission’s weaker economic outlook and by concerns about the fiscal cliff.
Randgold Resources led a sell-off by mining companies, tumbling more than 6 per cent. Xstrata and Anglo American both lost at least 2 per cent.
The benchmark FTSE 100 declined 93.27 points, or 1.6 per cent, to 5,791.63 at the close as all but eight companies dropped.
European stocks in general fell the most in two weeks, although there were some notable exceptions. In France, BNP Paribas jumped 1.1 per cent after third-quarter net income more than doubled. Hochtief meanwhile advanced 3.1 per cent after reiterating full-year profit targets.
The Stoxx Europe 600 Index declined 1.4 per cent to 271.04 at the close of trading, erasing an earlier gain of as much as 0.7 per cent. The benchmark gauge has still rallied 16 per cent from this year’s low on June 4th as central banks around the world reduced borrowing costs and expanded stimulus programs.
“Worries about the state of the European economy are weighing on sentiment,” said Markus Wallner, an equity strategist at Commerzbank in Frankfurt.
US stocks slid, sending the Dow Jones Industrial Average to its biggest drop in a year, oil sank and treasuries surged the most in five months as President Barack Obama’s re-election set up a budget showdown with the Republican-controlled House.
The Dow tumbled 312.95 points, to 12,932.73 for its worst drop since November 9th, 2011. The Standard and Poor’s 500 Index, which is up 64 per cent since Mr Obama took office in 2009, lost 2.4 per cent to 1,394.53, its lowest level since August. – (Additional reporting – Reuters, Bloomberg)