Fed Reserve bond buying rallies markets

Global stocks, bonds and currencies took a wild ride yesterday after Federal Reserve chairman Ben Bernanke said the US central bank’s massive bond-buying programme would remain in place, even as the Fed considers cutting back stimulus in coming months.

The Iseq index was virtually unchanged from the previous day's trading.

Bank of Ireland jumped 5.4 per cent to €0.19 cent.

Glanbia, which had fallen by 1.9 per cent on Tuesday, rose slightly, by 0.6 per cent to €10.94.

Ryanair continued its recent run of form, rising another 1.4 per cent to €6.86.


Growth-sensitive sectors drove Britain's top share index to fresh 13-year highs, receiving a boost after the top US central banker reaffirmed his commitment to continued stimulus.

The FTSE 100 spiked to an intraday high of 6,875.62, its highest level since January 2000.

The banking sector received a lift after state-backed British lenders Lloyds Banking Group and Royal Bank of Scotland agreed plans to shore up their capital with the financial regulator, removing a barrier to the government offloading its shares.

Lloyds and RBS traded up 2.3 and 2.2 per cent respectively, with RBS having traded in negative territory before its announcement.

Gains in mining came as copper hit a six-week high, and the sector rose 1.6 per cent, taking gains since mid-April to 9.3 per cent.

ARM Holdings dropped 1.4 per cent after reports that Samsung Electronics may choose another vendor to provide a processor.

Marks and Spencer Group added 1.6 per cent to 475.2 pence, the highest price since January 2008.

Banco Santander raised its recommendation on the shares to hold from underweight and Barclays increased its 12-month price estimate on the shares by 9 per cent to 350 pence.
European stocks were little changed.

The Stoxx Europe 600 Index added 0.2 per cent to 310.59 at the close of trading.

The gauge, which on Tuesday climbed to its highest level since June 2008, has rallied 97 per cent since March 2009 as European Central Bank president Mario Draghi pledged to preserve the euro and the Federal Reserve embarked on three rounds of stimulus.

National benchmark indexes climbed in 13 of the 18 western European markets. France’s CAC 40 rose 0.4 per cent and Germany’s DAX jumped 0.7 percent.

Mining companies rallied with base metal prices on the London Metal Exchange. Antofagasta increased 3.9 per cent to 1,002 pence, Glencore Xstrata advanced 3.5 per cent to 351 pence and Anglo America climbed 2 per cent to 1,653.5 pence. Metro Surges Metro jumped 10 per cent to €27.34, its biggest gain since November 2008.

Lagardere, France's largest publisher, advanced 3.4 per cent to €28.75 after JPMorgan Chase upgraded the stock to neutral from underweight.

US stocks rose with the dollar, while treasuries and gold fell, as investors weighed prospects for economic growth and future stimulus efforts from the Federal Reserve.

The Standard and Poor’s 500 Index was up 0.5 per cent at 1,677.91 by lunchtime.

JP Morgan Chase jumped 2.8 per cent to a 12-year high of $54.52 to lead gains in the Dow Jones Industrial Average. Ten of the main industry groups in the S&P 500 advanced, with healthcare, financial and consumer-staples companies climbing at least 0.7 per cent to lead gains.

Pfizer rallied 2.7 per cent after offering investors a share exchange to reduce its stake in Zoetis.

Saks soared 14 per cent after people with knowledge of the matter said the retailer has hired Goldman Sachs Group to explore options including a sale. – (Additional reporting Reuters/Bloomberg)

Mark Hilliard

Mark Hilliard

Mark Hilliard is a reporter with The Irish Times