Markets

Global stocks drop amid fears of higher interest rates for longer

Oil prices briefly rose above $89 a barrel for first time since October, which hit stocks in the travel sector

Travel sector stocks took a hit as oil climbed about $89 a barrel for the first time since October. Photograph: Timothy Clary/Getty Images

Colin Gleeson
Tue Apr 2 2024 - 18:40

Stocks and bonds around the world dropped on Tuesday as solid economic readings and a rally in commodities spurred speculation that major central banks will keep rates higher for longer.

Dublin

Euronext Dublin finished the day down 0.6 per cent, which was largely in line with international peers. The increased chances of rates staying higher is seen as positive for banks, and AIB climbed 1.4 per cent. Bank of Ireland, however, slipped 0.9 per cent.

Oil prices briefly rose above $89 (€83) a barrel for the first time since October, which led to falling stocks in the travel sector. Airline Ryanair finished down 2.4 per cent, while Dalata – the biggest hotel operator in the State – was down 5 per cent at close of business.

On a more positive note, Irish Continental Group, which owns Irish Ferries, resisted the slump to finish the day up 3 per cent.

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“We’re still seeing good demand for Irish Continental Group, and it actually closed up €5, which is a pretty significant number,” a trader noted. “Most of the trading was at €4.85 and €4.90. So, that’s quite impressive. There is good demand in that space.”

London

The FTSE 100 looked to be pushing towards an all-time high before falling back in the afternoon and closing the day down.

The index briefly touched a high of 8,015.63 during the morning, its best score since February 2023, and only about 31 points lower than its record. The FTSE has traded higher only on two days in its history, both a little under 14 months ago.

But by the end of the day, the index’s fortunes had turned, closing down 17.53 points, or 0.22 per cent, to end the day at 7935.09. The fall was led by Reckitt and Entain, which both were about 5 per cent weaker.

There was little company news on the market on Tuesday. Shares in Superdry plummeted more than 55 per cent after news that was announced last week after markets had closed. The company said chief executive Julian Dunkerton was not planning to make an offer to buy the business, after being linked to a takeover.

Elsewhere, shares in Revolution Bars were suspended after the chain was unable to publish its results on time. It did not say why there had been a delay and said the results would be made public in “due course”.

Europe

Equities on the continent turned negative, tracking a sharp drop in US stocks, as traders reassessed the path of interest rates.

The Stoxx Europe 600 index was down 0.8 per cent, while, in Frankfurt, the Dax index fell 1.09 per cent, and the Cac 40 in Paris closed down 0.92 per cent.

European stocks have just marked their best quarter in a year, with traders optimistic about the economy and that interest rates would come down soon.

New York

Wall Street’s main indices dropped, dragged down by rising treasury yields and by Tesla, as recent strong economic data fuelled uncertainty about the timing of interest rate cuts from the Federal Reserve.

Shares of rate-sensitive growth stocks including Nvidia, Microsoft and Amazon fell between 0.7 per cent and 1.4 per cent as the US treasury 10-year yield rose to 4.365 per cent, its highest this year.

Tesla also tumbled 5 per cent after the automaker missed market expectations for first-quarter deliveries.

Shares of UnitedHealth, CVS Health and Humana fell between 7.5 per cent and 14.1 per cent as the US government kept reimbursement rates for providers of Medicare Advantage health plans unchanged, in a setback to insurers.

At 11.56am eastern time, the Dow Jones Industrial Average was down 1.19 per cent; the S&P 500 was down 1 per cent; and the Nasdaq Composite was 1.32 per cent. – Additional reporting: agencies

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter

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