Clarity from the Fed helps markets stabilise after bout of nerves

Defensive stocks fare best as European markets struggle to advance

Markets stabilised on Thursday after minutes of the Federal Reserve’s last policy meeting provided more clarity on the central bank’s campaign to quell rampant inflation.

"The Fed minutes confirmed the feeling in markets, which was that 50 basis point (half a percentage point) rate hikes were on the table and that quantitative tightening will begin in May even though the market believes economic growth will be impacted," said Edward Park, chief investment officer at Brooks Macdonald Asset Management.

DUBLIN

The Irish indices eked out gains after the sharp falls of Wednesday. Ryanair had a decent showing, more than making up for the previous day's blip, to add almost 4.9 per cent to close of €13.515.

It was also a positive day for food stocks, with ingredients group Kerry ending the session close to 1.1 per cent stronger on €102.55 while Glanbia ended up €10.42, up 1.36 per cent.

Greencoat Renewables, which announced another wind farm acquisition, this time in Spain, was 1.7 per cent firmer on €1.18.

The banks finished in the red, with AIB slipping 0.42 per cent to €1.89 and Bank of Ireland shedding 0.74 per cent to €5.64. Permanent TSB fared worse, slipping 1.23 per cent to €1.60.

The housebuilders were also hit by the chill running though the sector in the UK. Cairn Homes closed on €1.224, down 1.6 per cent, while rival Glenveagh was 1.5 per cent weaker at €1.172.

LONDON

Britain's FTSE 100 slid on Thursday, weighed down by oil major Shell after it flagged a bigger writedown following its decision to exit Russia, while a jump in shares of gambling firm 888 Holdings helped limit some losses on the midcap index.

The blue-chip index closed 0.5 per cent lower, with Shell falling 2.1 per cent as it raised its Russia writedown to as much as $5 billion, more than previously disclosed.

Broadly, economy-linked sectors such as oil and gas, miners, banks and insurers fell on concerns over slower economic growth following hawkish signals from the Federal Reserve and amid the war in Ukraine that has elevated inflation.

The domestically focused FTSE 250 midcap index slipped 0.3 per cent, dragged down by Countryside Partnerships. Shares of the housebuilder tumbled 14.6 per cent after it warned of lower annual profit following a business review of its operations.

Overall, the sectoral index fell 3.5 per cent after mortgage lender Halifax said British house prices grew strongly in March but the cost of living crisis clouded the outlook.

The company 888 Holdings surged 16.8 per cent after the gambling firm and US-based Caesars Entertainment cut the deal value of William Hill’s non-US assets, allowing a smaller equity raise to fund the deal.

Peer Entain dropped 4.1 per cent as its online sales fell for a second straight quarter.

EUROPE

European shares reversed early gains to skid on Thursday, as risks from a hawkish Federal Reserve and Washington’s new sanctions on Russia kept investors on edge, while defensive stocks advanced.

The pan-European Stoxx 600 index slipped 0.2 per cent, paring back gains made earlier in the day, after losing 1.5 per cent in their worst session in a month on Wednesday.

All major regions were in the red, with Germany’s DAX 30 closed down half a percentage point at 14078.1, with the CAC in Paris giving up fractionally more, 0.6 per cent.

Sectors more resilient to economic downturn outperformed, with healthcare jumping 1.4 per cent to a record high, and construction and chemicals adding 0.3 per cent and 0.4 per cent respectively. Oil stocks led losses, dipping 1.6 per cent, while tech stocks lost 1 per cent.

Shares of Atlantia, the billionaire Benettons' highway and airport group, held on to gains after a non-binding bid from Global Infrastructure Partners and Brookfield Asset Management.

New York

US equities were little changed in afternoon trading, paring back earlier declines, after the tech-heavy Nasdaq 100 posted its deepest two-session drop in nearly a month on Wednesday.

US 10-year and 30-year yields rose to the highest level since 2019, outpacing shorter-maturity yields, as traders also weighed the Fed’s plan to reduce its holdings of Treasury debt.

The Fed minutes Wednesday showed officials were focused on tamping down inflation and outlined plans to pare its balance sheet by more than $1 trillion a year. – Additional reporting Bloomberg/Reuters/PA