Business

Global stocks rise as US inflation slows

Euronext Dublin finished up a third of a per cent on what was a half day of trading with volumes down about 30%

Traders work on the floor of the New York Stock Exchange. European shares inched lower, weighed down by technology and sportswear makers, while investors were on tenterhooks ahead of a crucial US inflation print and markets assessed domestic data to back bets of lower interest rates next year. Photograph: Angela Weiss/AFP via Getty Images

Colin Gleeson
Fri Dec 22 2023 - 15:40

Global stock markets rose while the dollar hit a near five-month low on Friday after data showed that annual US inflation slowed further below 3 per cent in November, supporting the view that the Federal Reserve could cut borrowing costs next year.

Dublin

Euronext Dublin finished up a third of a per cent on what was a half day of trading with volumes down about 30 per cent in the run-up to Christmas.

The only remotely major movers were in the financial sector where Bank of Ireland climbed 3.4 per cent, while AIB and Permanent TSB rose 1.1 per cent and 2.3 per cent respectively. A trader pointed out the moves were sectoral rather than in response to stock specific news.

Elsewhere, housebuilder Cairn Homes climbed 3 per cent, while insulation specialist Kingspan dropped 60 basis points.

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Among the food names, Glanbia was down 90 basis points at close of business, while dairy giant Kerry Foods was up just over 1 per cent.

London

British equities logged solid weekly gains heading into the Christmas holidays amid rising hopes that major central banks, including the Bank of England, could consider interest rate cuts next year.

The blue-chip FTSE 100 edged 0.04 per cent higher, extending gains to a fourth week, while FTSE 250 midcap index rose for a third straight week, up 0.3 per cent.

The rally in global markets driven by the Federal Reserve’s dovish pivot and a surprise drop in domestic inflation boosted UK equities.

Britain’s economy might now be in a recession, according to data, which showed output shrank in the July-to-September quarter.

“The outlook for 2024 looks shaky with a sluggish consumer, ongoing price increases and more expensive borrowing costs,” said Victoria Scholar, head of investment at interactive investor.

Retailers were among the top decliners, down 0.7 per cent, while construction and materials were the top gainers, adding 1.0 per cent.

Heavyweight energy stocks added 0.4 per cent, tracking rising crude oil prices as tensions persisted in the Middle East following Houthi attacks in the Red Sea, capping losses.

Aerospace and defence was the best performing FTSE 350 sector this week, while personal goods was the worst hit.

Europe

European stocks closed with a whimper on Friday, as softer-than-expected US inflation data offset losses in sportswear makers and China-exposed stocks ahead of the Christmas holiday.

The pan-European STOXX 600 index edged up 0.1 per cent and notched its sixth week of gains in a row – a winning streak that was last seen in December 2022.

However, trading volumes were thinner than usual as traders prepared to break for the holiday season.

The ripple effect of Chinese regulators launching rules aimed at curbing spending on video games was seen across global markets.

Dutch tech investor Prosus, which has stake in Chinese gaming company Tencent, tumbled 13.4 per cent to post its biggest one-day percentage fall in more than a year. French video games developer Ubisoft slipped 1.5 per cent.

Sportswear companies were also a drag on European indexes after US giant Nike cut its annual sales forecast, largely blaming cautious consumer spending.

Germany’s Adidas and Puma fell 5.3 per cent and 7.2 per cent, respectively, while UK-listed JD Sports dropped 5.1 per cent.

New York

US stocks pulled back from session highs but remained on track for an eight-week bull run after inflation readings reinforced Wall Street’s conviction in early and deep rate cuts next year. Treasuries were mixed ahead of an early close.

The S&P 500 rose 0.3% after the latest data largely met expectations. Trading volume ahead of the Christmas holiday trailed the 30-day day average by more than 20 per cent.

The benchmark is on pace for an eight-week winning streak – the longest in more than five years. The Nasdaq 100 is poised to notch a similar run.

Nike was the biggest drag on the S&P 500, falling as much as 12 per cent in New York trading, after the sports apparel maker flagged a weaker sales outlook and an as much as $2 billion cost-cutting plan.

Apple’s less than 0.5 per cent slump also weighed on equities gauges. The iPhone-making giant has added nearly $1 trillion in market value this year. – Additional reporting: Reuters and Bloomberg

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter

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