Markets paused for breath on Thursday, with the Thanksgiving holiday in the US pushing volumes lower across the globe. European equities eked out modest gains on hopes that the European Central Bank (ECB) and the US Federal Reserve could soon look to slow the pace of interest rate hikes amid a worsening economic outlook.
Dublin
The Thanksgiving holiday in the US took the wind out of a few sails on Thursday, traders in Dublin said, with many UK and European fund managers having also taken the day off. On low volumes the Iseq index was flat on the session after outperforming the big European indices on Wednesday.
There was little stock specific news for investors to chew over. But published on Thursday, the minutes of the ECB governing council’s October meeting showed that officials had discussed hiking rates at a slower pace, citing the fact that the hike was accompanied by other monetary-tightening measures.
Travel and tourism stocks gained as the price of oil dropped, with reports that the EU is considering a higher-than-expected price cap on Russian crude and signs of a global slowdown increased.
Hotel group Dalata, the biggest mover on the session, added 4.4 per cent to close at €3.45 per share. Ryanair gained 1.6 per cent to close €13.28. Shares in ferry operator Irish Continental Group jumped 2.3 per cent to €4.50.
Irish banks continued to slide on Thursday, with Bank of Ireland, down 1.9 per cent to €7.40 per share, the biggest loser on the day. AIB, meanwhile, shed 1.5 per cent to close at €2.94, while Permanent TSB was flat at €1.72.
London
The FTSE 100 index was flat on the session after being led higher on Wednesday by mining and oil stocks. UK stock markets have recovered sharply since a botched mini-budget roiled sentiment in October, with investors hoping that measures by the new government will help instil confidence even as Britain faces what is expected to be a lengthy recession.
A particular weak spot was Dr Martens, which tumbled 20 per cent and looked set for its biggest percentage drop ever, after warning that its annual core profit margin would be lower than last year.
Among other stocks United Oil & Gas slumped 19 per cent after the oil and gas exploration company cut its full-year production forecast for its Abu Sennan licence.
Shares in Vodafone, down 2 per cent, Imperial Brands, down close to 4 per cent, and National Grid, down 2.6 per cent, slid as they traded without entitlement for dividend payout.
Lloyds of London, which has gathered momentum since October, added 1 per cent. NatWest’s share price rose 1.7 per cent, while shares in Barclays jumped close to 0.8 per cent.
Europe
Reflecting the generally upbeat mood in equity markets on Thursday, the pan-European Stoxx 600 and the blue-chip Stoxx 50 indices both gained 0.5 and 0.4 per cent respectively. At the national level, the French Cac40 also added 0.4 per cent, while the German Dax index climbed by close to 0.8 per cent.
European bonds rallied as traders trimmed wagers on rate increases by the European Central Bank, with risk-sensitive Italian debt leading the gains.
The real estate sector outperformed, boosted by the prospects of slower rate hikes and analyst upgrades. German real estate group Vonovia led the Stoxx 50 table, adding 5.7 per cent.
Italian and Spanish banks also felt the benefit with Turin-headquartered Intensa Sanpaolo up 0.7 per cent and Santander adding 0.4 per cent.
New York
There was no cash US equity market trading on Thursday sue to the Thanksgiving holiday. However, Wall Street futures were up after the S&P 500 closed at a two-month high Wednesday.
Minutes from the Fed meeting earlier this month indicated several officials backed the need to moderate the pace of rate hikes, even as some underscored the case for a higher terminal rate. This adds weight to expectations the central bank will raise rates by 50 basis points next month, ending a run of jumbo 75 basis point increases.
“It was the start of a more different and dovish narrative from the Fed”, said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James. “Is it a pivot? No, but are we seeing a slowdown in rate hikes and that path downwards towards rate cuts coming through? Yes. I think we will look back and say this was the peak of it.”
Data Wednesday also showed US business activity contracted and unemployment applications rose as the economy cools.
A gauge of dollar strength fell further, taking declines into a third day. There was no trading in Treasuries due to the US holiday.
