Rally in world stocks cool as EU Brexit summit begins

A four-day rally in world stocks cooled amid choppy European markets as EU leaders started a two-day summit in Brussels with the aim of striking a deal to keep Britain in the union.

DUBLIN

The Irish market rose 0.3 per cent on the day to bring the Iseq index a little above 6,130, well back from a level around 6,748 only two months previously.

Financials stocks declined 1.59 per cent amid concerns about the state of the sector at global level. “If there are issues there, they haven’t gone away,” a Dublin trader said of international sentiment. Bank of Ireland finished 3 per cent weaker at 25.6 cent, down from 26.4 cent on Wednesday.

Kerry dropped by 2.63 per cent to finish at €72.55. The trader attributed the declined to a “read through” from Swiss food giant Nestlé, whose shares lost 3.7 per cent after its smallest annual sales gain for six years. By contrast, Glanbia gained 0.03 per cent to close at €17.50.

Smurfit Kappa gained almost 0.4 per cent to finish at €22.61.

LONDON

Britain’s top share index end a four-day winning streak with a fall, led lower by major mining stocks and hit by growing concern over the potential impact of Britain’s exit from the EU as political talks began in Brussels.

The FTSE 100 lost 1 per cent, at 5,971.95 points at its close, in line with the broader European market. Mining stocks, which had rebounded, were among the worst performers. Anglo American, whose shares surged 17.6 per cent on Wednesday, dropped 7.7 per cent as S&P’s downgraded its credit rating to junk, the third agency to do so this week.

Tullow Oil, a member of the FTSE 250 mid-cap index, slumped 11.3 per cent after reporting technical issues on one of its sites in offshore Ghana.

In a note sent to media on Thursday, major bond investor Pimco, whose flagship fund alone manages $90 billion in assets, said it saw a 40 per cent chance of a Brexit at the referendum later this year.

EUROPE

European equities fell back after climbing to a two-week high during the day, as support from gains in tech shares was counteracted by a decline in commodity-related stocks in the energy and mining sectors.

The pan-European FTSEurofirst 300 index was 0.1 per cent, lower at 1,293.92, by the close, having touched 1,304.97 earlier in the session, its highest level since February 4th.

It had ended 2.7 per cent stronger on Wednesday following a surge in oil prices, but came back from highs as Wall Street turned lower, having posted its first three-day rally of 2016. The FTSEurofirst 300 is up 5 per cent this week, set for its biggest weekly rise since January 2015.

It has been buoyed by a recovery in the price of oil and receding fears over global growth, although the index remains down 10 per cent this year.

Food group Nestlé dropped 3.7 per cent after it missed expectations, saying it was getting harder to raise prices in a tough economy. Nestlé’s decline saw Switzerland’s SMI underperform euro zone blue chips in France and Germany.

NEW YORK

Wall Street was lower in morning trade, snapping a three-day rally, after a slump in Wal-Mart weighed on retail stocks and oil prices retreated.

Seven of the 10 major S&P sectors were lower, led by a 0.7 per cent drop in the financial sector, which led the recent rally. Crude oil prices, whose performance have often dictated stock movements, dropped from session highs after a report showed US crude stocks rose last week.

Wal-Mart slumped 4 per cent to $63.46 after the retailer reported a lower quarterly profit and gave a lackluster sales outlook. The stock was the biggest drag on the Dow. Limiting the losses was IBM, which rose 5.4 per cent to $132.91 after Morgan Stanley upgraded the stock to “overweight”, saying the transformation to a cloud-focused business was not priced in.

– (Additional reporting Reuters)