Stocks in limbo as investors await rates decisions

Global equities indices trod water on Tuesday as investors look ahead to next week’s key central bank policy meetings.

European shares were essentially flat on the session after hawkish comments by European Central Bank (ECB) policymakers on Monday cemented expectations for another interest rate hike after the governing council meets in Frankfurt next Thursday.

Dublin

Amid subdued post-bank holiday trading volumes in Dublin, the Iseq index was down 0.3 per cent on Tuesday, led lower by bank stocks.

AIB shed 2.9 per cent to close at €3.83 per share after Morgan Stanley downgraded the lender’s stock from “equal weight” to “under weight” with a price target of €4. Permanent TSB, down 2.3 per cent to €2.11, and Bank of Ireland, down 0.6 per cent to €9.14, were caught in the wake.

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Building materials giant CRH also shed almost 0.8 per cent to €44.59.

Ryanair’s shares gave back more than 1 per cent to €16.72, underperforming its UK peers. Traders in Dublin said the decline was more to do with the low-cost airline’s strong recent run relative to its competitors.

Defensive stocks also performed well with shares in Kerry Group finishing on a session high of €92.46, up more than 1.1 per cent while Greencore added.

London

After dropping in early trading, the UK’s benchmark FTSE 100 index closed higher by 0.4 per cent while the mid-cap FTSE 250 was up by 0.6 per cent.

The resource-heavy FTSE 100 had slipped 0.4 per cent in the first few hours of the session, with energy stocks shedding 1.7 per cent tracking lower crude oil prices. Shares in oil major Shell and BP finished the session off by 0.4 per cent and 0.5 per cent.

British defence contractor Chemring jumped 9.3 per cent after it reported higher order intake in the first half of the year.

Europe

The blue-chip Stoxx 50 index was flat on the session while the pan-European Stoxx 600 edged 0.4 per cent higher.

On Monday, Dutch central bank chief Klaas Knot said that underlying price pressures in the euro zone may prove more difficult to tame but monetary policy is showing signs of effectiveness and further rate hikes must be done step by step. The comments – considered another strong indication that the ECB expects to raise its benchmark interest rate when policymakers meet next Thursday – countered positive movements in European markets from Danish healthcare giant Novo Nordisk and its peers.

Shares in the Copenhagen-based firm traded more than 4 per cent higher after announcing that it has started talks to buy a controlling stake in medical device designer Biocorp. The French company’s shares, meanwhile, were up 14 per cent after the news was announced.

European bank stocks were also pushed higher by expectations of further ECB rate hikes with Santander, BNP Paribas, Intesa Saopaolo all ahead by between 0.7 per cent and 1.7 per cent.

New York

Regionals banks led US stocks higher on Tuesday while a loss in shares of Apple took the air out of a rally in technology stocks. The Nasdaq Composite and the Dow Jones Industrial Average were up by about 0.2 per cent at closing bell in Dublin.

The S&P 500 also added just 0.2 per cent as Apple shed an additional 0.6 per cent on concern the steep price of its much-anticipated mixed-reality headset will crimp shipments. The biggest gainers Tuesday included Zions Bankcorp, Comerica and KeyCorp.

Coinbase Global plunged 15.2 per cent after the UD Securities and Exchange Commission sued the crypto exchange, accusing it of illegally operating without having first registered with the regulator.

Investors are also weighing what the US Federal Reserve’s next move is likely to be when it meets next week. While new economic data on Tuesday signalled the Fed’s monetary tightening was cooling the world’s largest economy, it followed strong monthly jobs data last week, clouding the outlook for the Fed’s policy.

Advanced Micro Devices rose 3.6 per cent after Piper Sandler raised its price target on the stock.

Oil stocks fell, with Exxon Mobil and Chevron dropping about 1 per cent each as crude prices declined nearly 2 per cent on concerns about the global economy.

– Additional reporting: Reuters, Bloomberg