Shares extend gains as investors bet on softer rates action

ISEQ index closes 5.5% higher on Tuesday, outperforming its European peers by a margin

European stocks gained for the third session in a row on Tuesday as they recovered from the oversold levels precipitated by UK chancellor Kwasi Kwarteng’s late September mini-budget.

A calmer British government bond market eased pressure on the pound after last week’s turmoil, and the euro continued to recover from its recent 20-year low.

In the US fresh economic data showed that job openings, a measure of labour demand, fell by the most in nearly two and a half years in August.

With speculation mounting that the Federal Reserve could temper its monetary policy stance in response to worsening economic conditions, large cap growth stocks pushed indexes higher as the 10-year Treasury yields slipped to two-week lows.

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Dublin

The ISEQ index closed 5.5 per cent higher on Tuesday, outperforming its European peers by a margin. Traders in Dublin said with small and mid-cap companies particularly oversold towards the end of last quarter, the composition of the Irish index meant it was poised for a bounce back as buying recovered.

Paddy Power-owner Flutter was up 9.7 per cent to €10.80 by closing bell, a huge movement for the company, market experts said. A short squeeze helped buoy the betting giant’s share price on Tuesday as investors, who bet against Flutter, were forced to buy shares as the price increased.

AIB and Bank of Ireland were up 6.8 per cent and 7.8 per cent to €2.70 and €7.33 per share respectively after Minister for Finance Paschal Donohoe announced the resumption of AIB’s share trading plan last week.

CRH gained 5.3 per cent to finish at €35 per share. Insulation specialist Kingspan – among the most oversold stocks in recent weeks, according to traders – also gained 5.3 per cent to €51.16 following Monday’s 4.9 per cent gain.

Ryanair was also up close to 5.3 per cent after new traffic figures showed September was its third busiest month ever.

London

London’s blue-chip FTSE 100 index rose 2.6 per cent, building on gains from the previous session after the UK government reversed parts of its controversial tax cut plans, but still underperformed its European peers.

Among the biggest risers in London were Paddy Power-owner Flutter Entertainment, up nearly 10 per cent to 10,590p; retail tech company Ocado, up 8.4 per cent to 507p and Aer Lingus-owner IAG, up 7.6 per cent to finish the day at 101.06p.

Shares in bakery chain Greggs surged 10 per cent after publishing strong numbers showing its gross sales increased by a margin of 14.6 per cent in the third quarter of the year.

The biggest fallers were SSE, down almost 1 per cent; British Land, down 0.4 per cent, and Aveva, down 0.06 per cent.

Europe

With investors increasingly convinced that the most dramatic central bank moves are behind them, European stocks extended gains for a third session in a row. The pan-European STOXX 600 index closed 3.1 per cent higher as last week’s panic continued to subside, while the DAX finished the session up 3.8 per cent and the French CAC 40 closed 4.4 per cent higher.

All of the STOXX 600′s sectoral indexes gained, led by a 6.2 per cent jump in travel and leisure stocks. Dutch takeaway delivery company Just Eat, up 7.8 per cent, extended gains following last week’s announcement that it expects to turn profitable this year, earlier than expected.

Credit Suisse gained 8.9 per cent from oversold levels as market concerns about its viability abated somewhat.

Tech stocks rose 5.1 per cent, helped by gains in chipmakers, including ASML, STMicroelectronics and Infineon after the European Parliament approved rules to introduce a single charging port for mobile phones, tablets and cameras.

At the opposite end of the scale Norwegian salmon farming firm SalMar tumbled 10.3 per cent after the Norwegian government proposed a new resource rent tax on aquaculture operators last week.

New York

Wall Street’s three main indexed were up by between 2.4 per cent and 3.2 per cent by closing bell in Dublin following the S&P 500′s lowest close in nearly two years on Friday that capped its worst monthly performance since March 2020. The consumer discretionary sector led gains among the 11 S&P 500 sectors, rising more than 4 per cent.

Megacap market leaders such as Apple, Microsoft, Alphabet and Nvidia climbed between 2.37 per cent to 4.30 per cent. The Philadelphia SE Semiconductor index climbed 4.12 per cent.

Tesla bounced back 4.5 per cent from its steepest selloff in four months in the previous session, triggered by disappointing quarterly vehicle deliveries.

US banks such as Wells Fargo, JPMorgan Chase and Bank of America added more than 3 per cent each. – Additional reporting by Bloomberg, Reuters

Ian Curran

Ian Curran is a Business reporter with The Irish Times