Equities dip and oil slides as global risk rally stalls
Dublin market falls 1.6% in week’s final session
Food group Glanbia was down 1.7% to €10.27 by the end of the day
Global equity benchmarks slipped from record highs and oil prices dipped on Friday as weaker economic data in Japan and Europe and concerns that newly inaugurated US president Joe Biden’s stimulus plan may face Republican opposition curbed a week-long rally in risk assets.
Sentiment in Europe was already more cautious after Thursday’s European Central Bank meeting, in which the bank’s message was perceived as more hawkish than expected.
The Dublin market fell more than 1.6 per cent in the final session of the week, with declines in banking, travel and building stocks weighing on the index.
Kingspan shares fell almost 3 per cent to end the week at €62.95 in Dublin. Shares had earlier hit a low of €60.50, but recovered some ground. It was reported on Friday that a long-time Kingspan shareholder has reduced its stake on concerns about the Irish manufacturer’s insulation business raised by an inquiry into the Grenfell fire.
Liontrust Asset Management lowered its sustainability rating of Kingspan last month. The London-based asset manager owned 1.2 per cent of Kingspan at the end of last year.
Building group CRH also ended the day lower, with its shares falling 1.6 per cent to €36.12.
Stock in Ryanair was off 2.37 per cent to €14.84, while food group Glanbia was down 1.7 per cent to €10.27 by the end of the day.
London-listed shares fell on Friday as data showed UK business activity declined sharply in January due to severe curbs imposed to stem coronavirus infections, while a dip in oil and copper prices hit energy and mining stocks.
A preliminary IHS Markit/CIPS composite Purchasing Managers’ index (PMI) fell to 40.6 in January, down from 50.4 in December, with services companies in Britain hit the hardest.
Another set of data showed British retailers struggled to recover in December from a lockdown the previous month, marking a weak end to their worst year on record.
The domestically focused mid-cap Ftse 250 index shed 1 per cent, while the Ftse 100 index fell 0.3 per cent, marking its second straight week of losses.
A slide in the pound checked losses in the exporter-heavy Ftse 100, but oil majors BP and Royal Dutch Shell and miner Anglo American Plc were under pressure from weakness in commodity prices due to worries that new pandemic restrictions in China would curb demand.
The Ftse 100 has recorded consistent monthly gains since November, supported by hopes of a vaccine-led recovery, but it has recently underperformed its US and European peers, which have been boosted by hopes of more US stimulus.
European stocks ended lower on Friday, closing out another lacklustre week as business activity in the euro zone shrank in January after stringent lockdowns to control the coronavirus pandemic shuttered many businesses.
The pan-European Stoxx 600 index fell 0.6 per cent, but clung to a small 0.2 per cent rise for a week dominated by hopes for massive US stimulus.
Travel and leisure stocks fell 2.5 per cent, leading declines among sectors amid concerns over fresh travel restrictions in Europe. Other economically sensitive sectors like banks, oil and gas and mining shed more than 1 per cent.
IHS Markit’s flash composite Purchasing Mangers’ Index (PMI) for the euro zone fell further below the 50 mark separating growth from contraction, hitting 47.5 in January from December’s 49.1.
The bloc’s dominant service industry was hit hard with hospitality and entertainment venues forced to remain closed, but manufacturing remained strong as factories largely stayed open.
The auto-heavy German Dax fell 0.2 per cent, France’s Cac 40 dropped 0.6 per cent, and euro zone stocks were down 0.6 per cent.
The sealing of a post-Brexit trade deal, unprecedented stimulus measures from central banks and governments, and hopes that Covid-19 vaccines will spur a faster economic rebound drove the Stoxx 600 to a near 11-month high this week.
Wall Street’s main indexes slipped on Friday, dragged down by losses in blue-chip technology stalwarts Intel and IBM following their quarterly results, with concerns about a sharp rise in coronavirus cases also denting sentiment.
IBM slumped about 10 per cent and was the top drag on the Dow Jones Industrial Average after it missed estimates for quarterly revenue, hurt by a rare sales decline in its software unit.
Intel shed 9 per cent as new chief executive Pat Gelsinger’s post-earnings comments suggested the lack of a strong embrace of outsourcing.
However, boosts from Microsoft, Apple and Facebook helped offset some of those losses, keeping the main US stock indexes from falling further.
Shares of energy, financial, industrial and materials companies, which had boosted the S&P 500 by more than 14 per cent since the elections, fell the most on Friday.
The S&P 500 and the Nasdaq pared some losses after the opening bell as data showed US manufacturing activity surprisingly surged to its highest level in more than 13 years in early January.
At 12.05pm ET the Dow Jones Industrial Average fell 111.96 points, or 0.36 per cent, to 31,064.05, the S&P 500 lost 7.54 points, or 0.20 per cent, to 3,845.53 and the Nasdaq Composite lost 19.15 points, or 0.14 per cent, to 13,511.76.
Despite the weakness, the three major indexes were set for weekly gains, with the tech-heavy Nasdaq tracking its best weekly performance since November 6th as investors piled into Alphabet, Apple and Amazon. com in anticipation of their earnings reports in the coming weeks. – Additional reporting: Reuters, Bloomberg