Stocks endure another day of volatility as US bond yields creep up

World stock markets remained volatile on Thursday, with Europe initially performing well before poor performance in the US dragged stocks down.

Major US indices fell more than 1 per cent as US bond yields crept back towards four-year highs. The Iseq overall index fell 1.58 per cent in line with broader European markets.

In the UK, the FTSE 100 dropped on the day after the Bank of England raised the prospect of higher interest rates, sending the pound higher, which weighed on big British overseas earners.

DUBLIN

Irish stocks traded lower on Thursday in line with broader European markets, with stocks with US exposure mostly negative.

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Iseq heavyweight CRH was down by 3.06 per cent to €27.24 as shares in an Italian peer fell, with the company citing the weaker dollar and poor weather conditions in the US.

In a similar vein, Kingspan Group dropped 3.98 per cent, albeit on light volume, to €35.18.

Following news from the UK that Bank of England governor Mark Carney is planning to raise interest rates earlier and more sharply than previously thought, AIB fell by 0.54 per cent to €5.51 while Bank of Ireland was up by 0.26 per cent at €7.64.

The real estate investment trusts, which can be sensitive to rate rises, were all lower on the day, with Ires Reit down 1.12 per cent to €1.41, Green Reit down €1.35 per cent to €1.529 and Hibernia Reit, which had a trading update, falling 1.92 per cent to €1.479.

LONDON

The FTSE was closed 1.5 per cent lower at 7,170.69 points. The index is down 6.7 per cent in the year to date, making it the worst performer among top European bourses.

The rise in the currency weighed on the FTSE's predominantly dollar-earning firms, with shares in heavyweight consumer staples British American Tobacco, Reckitt Benckiser and Unilever dropping 1.8 per cent to 3.2 per cent.

On the day shares in banking stocks RBS, Barclays and Lloyds were among the dozen or so stocks in positive territory, up 0.4 per cent to 1 per cent. GlaxoSmithKline was another riser, up 1.4 per cent after US regulators delayed approval of a generic copy from Novartis of its blockbuster Advair lung drug, and after the group took legal action against Gilead Sciences over a new HIV drug.

Miners, along with energy stocks, were a big weight on the FTSE, with the two commodities-related sectors collectively wiping around 40 points off the index, as prices of copper and other metals fell and oil retreated.

EUROPE

European shares closed in negative territory on Thursday as volatility made a brutal comeback and ended a short-lived rebound after the beginning of the week’s global sell-off.

Europe's STOXX 600 share index fell 1.8 per cent. In Frankfurt, growth-sensitive stocks Volkswagen and BASF lost 3.8 per cent and 3.3 per cent respectively.

Results from ABB, a bellwether of European heavy industry, failed to cheer investors who have loaded up on cyclical stocks since December in the hope of a profit boost from synchronised global growth. The stock plunged 6.7 per cent.

SocGen's shares rose by 1.9 per cent after the bank reported forecast-beating results despite a quarterly drop in profit. Italy's UniCredit rose 2.1 per cent after profit topped forecasts.

France's Pernod Ricard, up 2.1 per cent after it raised its profit goals, were among the other companies to gain after earnings statements.

NEW YORK

In early trade, the Dow Jones Industrial Average fell 414.75 points, or 1.67 per cent, to 24,478.6, the S&P 500 lost 35.22 points, or 1.31 per cent, to 2,646.44 and the Nasdaq Composite dropped 109.53 points, or 1.55 per cent, to 6,942.45.

Among stocks, Twitter jumped 20 per cent initially after it reported its first quarterly net profit and topped Wall Street targets as video ad sales rose.

Tesla was down 3.2 per cent after the electric automaker said spending could rise in 2018.

– Additional reporting Reuters