Shares surge globally after US inflation surprise

Shares surged globally on Tuesday after the October US consumer price index came in cooler than expected, fuelling bets that the US Federal Reserve and other central banks may have reached the peak of the current rate hiking cycle.

The data showed US inflation remained unchanged in October amid lower gasoline prices, while underlying price pressures also showed signs of slowing.

Dublin

Euronext Dublin was a sea of green after the latest US inflation release. Investors were also optimistic that UK inflation data for September which is due this week will come in below the Bank of England’s forecasts.

The Iseq index moved 2.3 per cent higher on the session, with all the big names notching gains, including Flutter Entertainment. The Paddy Power owner, which has a significant and growing presence in the US, gained 3.5 per cent to finish at €146.90 per share on data showing an easing of price pressures on the American consumer across most categories of goods and services.

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In line with similar moves on the other side of the Irish Sea, Irish housebuilders and construction materials names were also higher on the day. Cairn Homes added 3.2 per cent to close at €1.22 per share while Glenveagh was up almost 4 per cent at €1.04. Insulation maker Kingspan was trading at €68.06 at the session end, up more than 4 per cent.

Irish banks also moved higher with AIB up 0.3 per cent to €4.24 and Bank of Ireland ahead by more than 4 per cent to €4.04. Ryanair, meanwhile, advanced close to 2 per cent to €17.75 per share.

Europe

European stocks soared despite a new estimate showing the euro area economy contracted marginally quarter-on-quarter in the third quarter, underlining expectations of a technical recession if the fourth quarter turns out equally weak. The pan-European Stoxx 600 index jumped 1.3 per cent while the blue-chip Stoxx 50 advanced by 1.4 per cent.

Siemens Energy added more than 3 per cent after it secured a €15 billion deal with the German government, its biggest shareholder Siemens and a consortium of banks, as the troubled manufacturer weathers massive losses at its wind-turbine unit.

European property stocks, meanwhile, rose to an eight-month high after the US inflation release. The Stoxx 600 Real Estate index – which tracks firms like France-listed shopping mall group Unibail-Rodamco-Westfield, German residential and commercial landlord LEG Immobilien and UK office building owner British Land Company – rose as much as 5.6 per cent.

London

Investors piled into UK stocks ahead of Wednesday’s consumer price index, which is expected to show a further cooling in price pressures in September. The FTSE 100 finished marginally higher while the mid-cap FTSE 250 surged ahead by more than 3.5 per cent.

Glencore added 4.5 per cent after announcing that it will buy a majority stake in Teck Resources’s coal business, ending a months-long saga that transfixed the mining industry. Its main rivals, Antofagasta and Rio Tinto, finished the session ahead by 5.5 per cent and 4 per cent respectively.

Irish-owned DCC surged 12.5 per cent higher. The group reported its first-half results on Tuesday, showing a 12 per cent increase in adjusted earnings over the period to £247.6 million. The Flogas owner also announced its agreement to acquire Progas, a leading distributor in Germany.

New York

US stocks climbed as bond yields sunk after an unexpected inflation slowdown bolstered bets the Federal Reserve’s aggressive hiking cycle is over and its next move will be a cut in mid-2024.

More than 95% of the S&P 500 companies rose, with the gauge up 2 per cent. The Dow Jones Industrial Average, meanwhile, had added 1.3 per cent at closing bell in Dublin and the Nasdaq Composite was up by more than 2 per cent.

Tesla led gains in megacaps and Nvidia extended its rally into a 10th straight session.

Snap climbed after reports that Amazon agreed to let its users shop for products directly from ads on the Snapchat app.

Home Depot also gained momentum despite narrowing its guidance for a decline in this year’s profit and revenue as home-improvement demand wanes. – Additional reporting: Bloomberg, Reuters