Values advance on stimulus rumour
GLOBAL STOCKS rallied, ending the longest slump since November, as JPMorgan surged after reporting earnings, and speculation grew that China and Europe will boost stimulus efforts.
The euro rebounded from a two-year low after Italy’s borrowing costs fell at an auction, despite a two-notch downgrade by Moody’s earlier in the day.
Analysts predicted the European Central Bank will ease monetary policy further in an ongoing effort to drive recovery.
China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis began, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound. China’s gross domestic product expanded 7.6 per cent last quarter, compared with an 8.1 per cent gain in the previous period.
JPMorgan climbed 5.5 per cent to lead gains in the Dow Jones Industrial Average as chief executive Jamie Dimon said the bank remains on course to post record earnings this year despite reporting a $4.4 billion trading loss from its chief investment office in the second quarter.
THE ISEQ index closed up almost 28 points, or 0.9 per cent, at 3,183.97, likely buoyed by the broader equity markets.
Traders noted that the market was in “kind of a summer trading pattern”. One trader described yesterday’s activity as “the best volume we’ve seen all week”, but noted that “by normal standards” it was still very weak.
Drinks manufacturer C&C was up 2.5 per cent to close at €3.38. A market source put this down to the fact that it had been oversold in the past few days due to continuing bad weather.
“There’s been a lot of talk of late that Carlsberg are rolling out a new cider product in the US but the view is that their increase in marketing will help the whole cider brand and will help Magners,” said another market observer.
“C&C had been beaten up a bit earlier in the week so yesterday’s lift was a bit of a natural correction,” he added.
CRH was off by a quarter of a per cent by the end of the day, closing at €1.04, but volumes were weak in Ireland and the UK. Bank of Ireland closed at €0.09, up 3.4 per cent, while Independent News Media was up 6 per cent at €0.24.
UK STOCKS climbed, led by a rebound in mining companies, after Chinese economic data heightened speculation authorities will roll out additional measures to support growth.
The FTSE-100 index closed up 57.88, or just over 1 per cent, at 5666.13.
A gauge of mining companies climbed 2.9 per cent, advancing for the first time in three days as copper led base metals higher on the London Metal Exchange.
Kazakhmys jumped 6.1 per cent, Vedanta Resources added 3.5 per cent, BHP Billiton rose 3.1 per cent and Antofagasta rose 3 per cent.
ITV climbed 3.7 per cent amid speculation the broadcaster may become a takeover target after Japan’s Dentsu agreed to buy Aegis Group for £3.16 billion on Thursday.
Alex de Groote, an analyst at Panmure Gordon and Co. in London said the Aegis takeover offer was probably driving ITV’s shares yesterday.
EUROPEAN STOCKS climbed for a sixth straight week, the longest winning streak in more than two years, on speculation of additional stimulus measures.
The Stoxx Europe 600 Index climbed 0.7 per cent to 256.26 this week, for the longest stretch of gains since April 2010.
The measure has rallied 9.6 per cent from this year’s low point on June 4th as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and relaxed conditions for possible support to Italy.
Aegis Group soared 45 per cent for the biggest advance in 19 years after Dentsu agreed to buy the advertising company.
Temenos Group AG sank 26 per cent as the Swiss maker of banking software cut its sale forecast and chief executive Guy Dubois quit.
STOCKS RALLIED yesterday, snapping the longest losing streak since May for the SP 500 Index, on the same speculation that China will boost stimulus measures.
JPMorgan surged 5.9 per cent to lead gains in the Dow Jones Industrial Average after Mr Dimon said the bank will still likely post record earnings this year even after reporting the $4.4 billion trading loss from its chief investment office in London during the second quarter.
Wells Fargo climbed 3.3 per cent after reporting a 17 percent rise in profit.
Phillips 66 rallied 4.5 per cent after Warren Buffett said Berkshire Hathaway has invested in the refiner. – Additional reporting: Bloomberg