Markets broadly flat as investors prepare for interest rate hikes

International sell-off in commodities hits resource stocks on the Iseq

European shares closed flat on Friday as gains in defensives countered a sell-off in semiconductor and commodity-linked stocks, while investors prepared for the European Central Bank’s (ECB) first interest rate hike in over a decade later this month.

In the US, Wall Street started the second half of the year on a dull note as investors worried over the risks to economic growth from the Federal Reserve’s resolve to curb rising prices at all costs.

Dublin

The Iseq closed up by 0.64 per cent, in a session of light trading volumes. Its heavyweight stocks were all mostly flat.

Ryanair rose by 2 per cent to €11.50, as the price of oil fell back and the airline appeared primed for further growth.

The litany of resource stocks on the Dublin exchange fell, however, as concerns grow globally of a recession. Petroneft was down 4 per cent to 1.2 cents, Ormonde Mining fell more than 7 per cent, Mincon was down 3.3 per cent to €1.16, while Kenmare Resources dipped 5.5 per cent to €4.96 per share.

London

UK stocks came under pressure after data showed factory activity lost more steam in June amid elevated price pressures, underlining the risk of a sharp slowdown or a recession in Britain. The blue-chip FTSE 100 ended flat after flirting with gains and losses in the session, while the domestically focused midcap FTSE 250 closed 0.16 per cent lower.

Shell fell 0.6 per cent as the oil major suspended plans to sell its onshore oil assets in Nigeria, and after Russia moved to create a new firm to take charge of the Sakhalin-2 oil and gas project. Shell, together with two Japanese trading companies, holds just under a 50 per cent stake in Sakhalin Energy Investment Co.

Jupiter Fund Management and Abrdn slid 4.2 per cent and 3.3 per cent respectively, after Citigroup downgraded the fund managers’ stocks to “sell” from “neutral”.

Chemring finished higher after the UK fraud office closed a four-year investigation into alleged bribery, corruption and money laundering at the grenade and ammunition manufacturer and one of its subsidiaries without prosecution. Shares rose by 5p to 320p after the company confirmed the matter is now closed.

Europe

Dutch semiconductor equipment maker ASML, Franco-Italian chipmaker STMicroelectronics and German chipmaker Infineon slid between 2.9 per cent and 5.4 per cent after US memory-chip firm Micron Technology gave a significantly weaker-than-expected business outlook on Thursday.

Utilities were the biggest sectoral gainers, up 3.1 per cent as Uniper recovered after plunging more than 14 per cent on Thursday when it asked the German government for help due to losses arising from Russian gas restrictions.

Other defensive sectors such as consumer staple stocks, telecoms and healthcare also rose as investors sought to hedge amid recession worries as data showed weak factory activity in Spain and Italy.

Among other stocks, La Française des Jeux (FDJ) slid 4.7 per cent after Citigroup downgraded the French lottery group’s stock to “sell” from “buy”.

Shares of Sodexo gained 4.1 per cent after the French catering and food services group reported better than expected third-quarter revenue.

New York

Shares of market leaders such as Amazon and Tesla edged higher on Friday, providing the biggest boost to the S&P 500 and the Nasdaq.

Micron Technology dropped 5.5 per cent as the memory-chip firm predicted quarterly revenue below market expectations, triggering concerns the chip sector was turning toward a down cycle.

The broader Philadelphia SE Semiconductor index fell 4.8 per cent.

Facebook-owner Meta Platforms slipped 3.2 per cent. The company has cut plans to hire engineers by at least 30 per cent this year, chief executive Mark Zuckerberg told employees, warning them to brace for a deep economic downturn.

Kohl’s tumbled 20.2 per cent as the department store chain called off its sale to Vitamin Shoppe-owner Franchise Group. — Additional reporting: Reuters/PA

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column