US and European markets gain in relief as fears of Evergrande default recede

Iseq rises 2.2% as the shares of both main banks perform strongly

People walk at Evergrande city plaza, next to its apartment buildings, in Beijing on Wednesday. Ripple effects from the Chinese real estate developer’s troubles continue to be  be felt across markets. Photograph: Roman Pilipey/EPA

People walk at Evergrande city plaza, next to its apartment buildings, in Beijing on Wednesday. Ripple effects from the Chinese real estate developer’s troubles continue to be be felt across markets. Photograph: Roman Pilipey/EPA

 

European and US stocks rose on Wednesday after fears eased of a default from debt-laden Chinese developer, Evergrande. Meanwhile, investors awaited a signal from the US Federal Reserve on how and when it would rein in stimulus. When it came, this suggested tapering would begin by the end of the year.

Dublin

The Iseq rose 2.2 per cent, driven by a strong performance from the banks. The financial sector across Europe was buoyant on the Evergrande news. Bank of Ireland finished the session ahead by 5.9 per cent to €5.03. AIB, meanwhile, was up 5.6 per cent to €2.30.

Online betting group Flutter Entertainment, which owns Paddy Power, gained more than 4 per cent to €184.30 after it agreed to pay $200 million to the Commonwealth of Kentucky to settle a judgment reinstated last year.

Ryanair rose 1.7 per cent to €16.77, as the airline continues to rebound from the pandemic faster than most of its European rivals.

Hotel operator Dalata rose 1.1 per cent to €3.66 as the Dublin market for business conferences reopened.

London

The FTSE 100 recorded its best day in two months, extending gains aided by heavyweight commodity-linked and bank stocks, while investors awaited the key central bank meetings for clues on a timeline for tapering stimulus.

The index ended up 1.5 per cent, with banks leading gains on the Evergrande news. Also among the gainers were industrial metal miners, up 3.2 per cent as copper prices surged.

Leisure group Ten Entertainment saw shares rise after it upped its full-year outlook as the trend for staycations amid the pandemic drove its best summer season. The company, which runs 10-pin bowling lanes and soft play centres, said sales surged 22.5 per cent in the first six weeks since reopening in May and then rocketed by 42 per cent in the 11 weeks since the end of June. Shares climbed by 13p to 268p as a result.

The domestically focused mid-cap index climbed 0.7 per cent, with Oxford BioMedica being the biggest gainer on a £50 million investment from Serum Institute of India.

Over-50s holidays group Saga dropped 0.1 per cent after it warned there was still uncertainty on the longer-term impact of Covid-19 on the sector.

Imperial Leather soap maker PZ Cussons dropped 4.6 per cent after reporting lower first-quarter revenue.

Europe

The Europe-wide Stoxx 600 index rose 1 per cent, extending Tuesday’s bounce after its worst session in two months, with commodity-linked stocks and banks leading gains.

The travel and leisure index rose 2.5 per cent hitting a 14-week high, after Entain jumped 5.1 per cent to an all-time high. The gambling firm revealed a $22.4 billion takeover proposal from Boston-based DraftKings, which was nearly double a bid it rejected from MGM this year.

The German Dax increased by 0.93 per cent and the French Cac moved 1.2 per cent higher.

Chinese developer Evergrande’s Frankfurt-listed shares jumped 41.0 per cent after hitting multi-year lows in the previous session.The property developer said it would make a coupon payment on its domestic bonds, offering relief to investors worried about payments default following financial troubles.

Deutsche Post fell 1.5 per cent after US delivery firm FedEx cut its full-year forecast after labour shortages crimped earnings and drove up costs.

New York

Heavyweight technology names were the biggest boost to the S&P 500 and the Nasdaq, while the Dow Jones was supported by big banks tracking US Treasury yields.

FedEx tumbled 8 per cent on posting a lower quarterly profit, and as the delivery firm cut its full-year earnings forecast.

Salesforce rival Freshworks rose as much as 33 per cent in the afternoon after raising $1 billion in an initial public offering priced above a marketed range. Shares of the software company were up 29 per cent from the IPO price to $46.33 by lunchtime, giving the company a market value of $13 billion. – Additional reporting: Reuters/PA/Bloomberg