Mixed day as investors waited for tapering news
Federal Reserve surprised US market by keeping bond purchases at current pace
Aer Lingus bucked the trend in a day of decline for airline stocks by rising 2.8 per cent to €1.54. Photograph: Frank Miller
It was a day of mixed results for European markets, with the FTSE nudging downwards in London, but stocks in Frankfurt and Paris enjoying better fortunes.
European stocks advanced overall, sending the Stoxx Europe 600 Index up 0.4 per cent. The benchmark index closed near a five-year high reached earlier this month, as investors awaited the Federal Reserve’s decision on reducing monthly bond purchases.
In an announcement made after European markets closed, the Federal Reserve said it would continue buying bonds at an $85 billion monthly pace for now, surprising financial markets that were braced for a reduction in the stimulus programme. The S&P 500 index rose to a record high in the immediate aftermath of its statement.
Earlier in the day, the Bank of England also released minutes from its meeting earlier in the month which showed officials unanimously decided there was no need for further stimulus, while US housing starts data were lower than expected.
The Iseq index finished flat on a day when there was little in the way of company-specific news. Insulation-maker Kingspan was the main outperformer, rising 4.8 per cent to €12.13, while Aer Lingus bucked the trend in a day of decline for airline stocks by rising 2.8 per cent to €1.54. Ryanair, however, fell almost 2 per cent to €6.41.
Building materials group CRH rose 0.5 per cent to €17.73, with the departure of Doug Black, the chief operating officer at its US business Oldcastle, having little impact on the stock.
Bank of Ireland was carried along by positive sentiment for financial stocks across European markets and rose 1.9 per cent to 22 cent.
There were some buyers in fruit distribution group Total Produce, which climbed 2.1 per cent to 79 cent.
The FTSE 100 index of blue-chip shares declined for a second day, slipping 0.2 per cent, as investors waited for the Fed statement on tapering.
Smiths Group advanced 2.6 percent to 1,412 pence. The producer of security scanners increased its final dividend to 27 pence a share and announced an additional payout of 30 pence per share.
Aberdeen Asset Management fell 3.5 per cent to 367.3 pence. Morgan Stanley cut its projections for the company’s 2014 and 2015 earnings by about 6 per cent and 7 per cent respectively, citing equity outflows and weak fund performance.
Fiberweb jumped 6.9 per cent to 102.5 pence, its highest price in six years, after the UK maker of fabric for nappies accepted a takeover offer of 103.2 pence a share from Polymer Group.
National benchmark indexes rose in 15 of the 18 western European markets today, with Germany’s DAX advancing 0.5 per cent and France’s CAC 40 increasing 0.6 per cent.
Siemens gained 1.3 per cent to €89.70, the highest price since July 2011. Europe’s biggest engineering company appointed SAP’s co-chief executive Jim Hagemann Snabe to its supervisory board and named Ralf Thomas as its chief financial officer. Lanxess fell 2.8 per cent to €49.95. The synthetic-rubber maker said it will cut 1,000 jobs and curb management bonuses as part of a plan to save about €100 million annually from 2015.
Wall Street stocks drifted before the Federal Reserve’s statement, which was made at 2pm New York time, but its unexpected move to continue bond purchases at their current rates sent the S&P 500 to a record intraday high.
In the minutes after the announcement, the Dow Jones industrial average rose 69.19 points or 0.45 per cent to 15,598.92, the S&P 500 gained 9.84 points or 0.58 per cent to 1,714.6 and the Nasdaq added 15.708 points or 0.42 per cent, to 3,761.407. – (Additional reporting: Bloomberg / Reuters)