Markets fall on US tax plan and UK rate hike
In Dublin, Smurfit Kappa continues positive trend despite posting fall in earnings
Traders work on the floor in the New York Stock Exchange. Photograph: Bryan Smith/Getty Images
World stock markets edged lower on Thursday, with Wall Street slightly lower and the US dollar modestly weaker after details of a Republican tax plan were released, while sterling dropped after the Bank of England’s policy announcement. The Republican tax plan called for a swath of changes to the US tax code, including slashing the corporate tax rate and reducing the number of tax brackets for individuals.
Sterling, meanwhile, slumped after the Bank of England raised interest rates for the first time in more than 10 years but said it expected only “very gradual” further increases over the next three years.
The Iseq fell 44 points to close at 6,965. Ryanair gave up some of the gains of recent days, falling 1.3 per cent to €17.14. The airline’s stock has had a topsy-turvy few weeks with the rostering controversy initially dampening sentiment before better-than-expected interim results reversed to the trend. Packaging giant Smurfit Kappa traded up again despite posting a drop in earnings earlier this week. The share closed up 1.4 per cent at €26.74, following a 3 per cent hike in the previous session.
Paddy Power Betfair also gave up some of the previous session’s gains, falling 0.8 per cent to €91.64.
Bank of Ireland, meanwhile, was up marginally at €6.82 while rival AIB was slightly at €5.07.
The pound plunged on Thursday, sending the FTSE 100 near record highs, as investors expressed disappointment in the messaging around the Bank of England’s first interest rate hike in a decade. Sterling tanked 1.4 per cent against the US dollar to trade at 1.305, marking its lowest level since early October, and tumbled 1.7 per cent versus the euro to trade at 1.119. Its losses pushed the FTSE 100 higher, as its listed multinational firms tend to benefit when foreign currencies are stronger.
The blue chip index ended the day up 0.9 per cent or 67.36 points to 7,555.32, coming in just shy of an all-time closing high of 7,556.24, which was reached last month. BT shares were among the worst performers, falling 6.9p to 253.6p, after the telecoms giant revealed a 4 per cent slump in quarterly earnings as the group counted the cost of heavy investment in sports rights and ongoing woes in its troubled global services arm. Supermarket chain Morrisons saw shares fall 1.1p to 222.9p despite booking a 2.5 per cent rise in like-for-like sales in the 13 weeks to October 29, which was its eighth consecutive period in positive territory.
Declines in health and tech stocks weighed on European shares on Thursday following an outlook cut from Coloplast, as forecast-beating results from Credit Suisse and Danske Bank limited losses.
The pan-European STOXX 600 index trended lower through the day after opening near two-year highs, ending the session down 0.5 percent.
Earnings weighed on European shares, led by an 11.8 percent drop in Coloplast . The Danish healthcare product maker fell after its new strategy disappointed the market and it cut its outlook.
Shares in heavyweight Swiss bank Credit Suisse rose 4.5 percent after it reported stronger-than-expected revenues.
Denmark’s Danske Bank also rose, by 2.8 percent, after reporting net income above estimates and an increase in its capital ratio. Nearly half of European companies have reported for the third quarter, with industrial, financial and tech sectors the best performers, according to Thomson Reuters data. Sixty-six percent of companies in the MSCI Europe have beaten or met earnings expectations.
US stocks were lower in early trading on Thursday as investors assessed long-awaited tax-cut proposals unveiled by Republicans amid deep skepticism around the passing of the bill. The proposals were largely in-line with expectations and called for slashing corporate tax rate to 20 per cent from 35 per cent and reducing the number of tax brackets for individuals.
A bunch of poor earnings also weighed on the market. Tesla dipped 6.6 percent after the electric car maker pushed back its target for volume production on its new Model 3 sedan by about three months, and reported its biggest quarterly loss ever. Newell Brands plunged more than 25 per cent after the Sharpie maker cut its full-year profit forecast and reported results below expectations. Facebook fell 2 per cent and was the biggest drag on the S&P and the Nasdaq after the company warned of a surge in expenses next year. Apple, which is set to report after market, was down marginally. Time Warner slipped 5 per cent after a report that the department of justice was considering seeking to block AT&T’s merger with Time Warner as it continues talks with the two companies.
Additional reporting by Reuters and Bloomberg