Market report: Fed decision on rates weighs on markets

The Federal Reserve's decision not to increase US interest rates weighed heavily on world markets as it added to concern about the outlook for the global economy. Equities lost ground on both sides of the Atlantic on foot of the announcement on Thursday by Fed chairwoman Janet Yellen. DUBLIN The Irish exchange did not evade the negative mood, although the Iseq net daily loss

was not as great as other markets. “The overriding sense was that Yellen has put a bit of doom and gloom on things notwithstanding all the growth in the Irish economy,” said a trader.

Although the Iseq index eased 0.79 per cent to close the week at 6,467.17, some of the bigger stocks saw bigger declines on the day.

Large caps dominated and the international sentiment was the main driver, said a trader. CRH finished down 1.64 per cent at €25.75, and Smurfit Kappa lost 1.18 per cent to close at €25.89. The international operations of these groups exposes them to any weakness in the global economy.

It was a similar story in food. Kerry gave up 0.98 per cent to finish at €65.79. Market participants reported a "large trade" of Glanbia shares, which finished 3.15 per cent weaker at €16.75½.

Hibernia REIT's entry on to the EPRA index, managed by the European Public Real Estate Association, saw large volumes of shares changing hands.

One account suggests 50 million shares may have been exchanged, although a trader warned of the possibility of double-counting. Hibernia’s shares finished 2.27 per cent weaker at €1.29.

Green REIT, which joined the EPRA index about six months ago, gained 2.75 per cent on the day to finish out the week at €1.53. LONDON Britain's top share index fell sharply, led lower by commodities stocks, after the Fed's decision. The FTSE 100 index ended 1.3 per cent lower at 6,104.11 points. It is down about 7 per cent so far this year. "Markets have taken cues from the US, but uncertainty prevails, and choppiness is the only certain result. Deflation is a concern. China is a concern, and oil prices look set to take another leg lower," said Brenda Kelly, head analyst at London Capital Group. EUROPE European stocks fell the most in two weeks after the Fed's meeting as a stronger euro weighed on export-dependent companies. Daimler, Volkswagen and BMW dragged car-makers to a 3.3 per cent drop, and Germany's DAX Index led declines among western European markets with a 3.1 percent slide.

"Stocks are pricing in the cost of a higher euro today, with the Fed being a lot more dovish than expected," said Allan von Mehren, chief analyst at Danske Bank in Copenhagen. WALL STREET Wall Street stocks closed lower yesterday in heavy trading as the Federal Reserve's decision to keep interest rates near zero fueled concerns about the potential impact of continuing weak global growth on US corporate earnings.

Yesterday’s volatility was also likely exacerbated by so-called “quadruple-witching”, when options on stocks and indexes, and futures on indexes and single-stocks all expire, prompting investors to buy or sell shares to cover expiring contracts.

The three major stock indexes each fell more than 1 per cent, with all 30 Dow components in the red.

More than 10.9 billion shares changed hands on US exchanges, compared with 8.1 billion average for the previous 20 sessions. Markets sold off on concerns about China’s economic growth.

The Dow Jones industrial average closed down 289.95 points, or 1.74 per cent, to 16,384.79, the S&P 500 lost 32.12 points, or 1.61 per cent, to 1,958.08 and the Nasdaq Composite dropped 66.72 points, or 1.36 per cent, to 4,827.23. – (Additional reporting: Bloomberg; Reuters)