World shares gained on Friday, just shy of all-time highs, while the dollar languished around one-year lows after a speech by the world’s most powerful central banker confirmed the US would soon begin interest rate cuts.
US Federal Reserve chair Jerome Powell, in a speech on Friday at the annual economic symposium in Jackson Hole, Wyoming, said “the time has come” to cut interest rates as rising risks to the job market left no room for further weakness and inflation was in reach of the Fed’s 2 per cent target, offering an explicit endorsement of an imminent policy easing.
“What he’s suggesting here is if the labour market continues to weaken we’re looking at a 50-basis-point rate cut in September as opposed to 25,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Europe’s broad Stoxx 600 index rose 0.5 per cent after Asian shares outside Japan had nudged down 0.1 per cent, but Japan’s Nikkei gained 0.4 per cent as investors digested inflation data and remarks from Bank of Japan governor Kazuo Ueda flagging a willingness to raise interest rates if the economy and inflation turn out as forecast.
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Dublin
Corre Energy recovered some lost ground rising 6.6 per cent on Friday after the company’s stock slumped in the previous session as its interim chairman resigned after less than two months and the embattled company holds talks to big shareholders for short term working capital.
Iseq heavyweight Ryanair rose 2.2 per cent as airline and tourism stocks gained on the back of more positive sentiment for global economy.
Financials AIB and Bank of Ireland responded to the news of an imminent rate cut in the US in different ways. AIB fell marginally while Bank of Ireland gained marginally.
Travel software group Datalex saw shares dive 7 per cent to 37 cent.
Europe
Nestle shares fell by the most in almost a month after the consumer goods company said Laurent Freixe will replace Mark Schneider as chief executive officer. Analysts questioned whether the unexpected management change will lead to Nestle walking away from its current financial guidance. Meanwhile, Dino Polska slumped after a weaker-than-expected earnings report.
Europe’s benchmark index has rebounded after a rough start to August as resilient economic data eased worries about a US recession. Traders have priced in nearly 100 basis points worth of cuts in interest rates through December, according to swaps data.
London
The UK’s benchmark FTSE 100 edged higher on Friday as markets globally cheered Mr Powell’s remarks. The blue-chip FTSE 100 index was up 0.5 per cent, but logged in weekly declines. The mid-cap FTSE 250 added 0.4 per cent, touching highest levels in two weeks and marked its second week of gains.
Traders now anticipate a 100 per cent chance of a September rate cut in the US, with one-in-three pricing in a half-point cut.
At the same event Bank of England governor Andrew Bailey said inflation pressure in the British economy was becoming less stubborn than in recent years, but it was still too soon to be sure. Precious metal miners, gained 1.2 per cent as gold prices extended gains following dovish remarks from Mr Powell.
Rate-sensitive real estate investment trusts and life insurance indexes added over 1 per cent each, while retailers led sectoral gains with a 1.9 per cent jump.
On the downside aerospace and defence shares slipped 0.5 per cent, leading sectoral declines, as aerospace components supplier Melrose Industries fell 7.1 per cent to the bottom of FTSE 100 following a double rating downgrade from UBS. Direct Line fell 2 per cent after the home and motor insurer flagged a change in its solvency capital ratio for the year ended 2023.
New York
Wall Street’s stock indexes jumped on Friday, with the benchmark S&P 500 index nearing a record high, also on the back of Mr Powell’s comments. The S&P 500 extended early gains and was less than 1 per cent away from surpassing a record high clinched in July, after falling as much as 9.7 per cent from that level earlier this month.
Megacap growth names such as Meta and Amazon.com climbed 1 per cent each, boosting the index, while chip stocks such as Nvidia and Broadcom rose more than 3 per cent each.
Among other movers on Friday, Workday shares jumped 11.2 per cent after the human resource software provider beat market expectations for second-quarter revenue and announced a $1 billion (€890m) stock buyback plan.
Cruise will offer its autonomous vehicles on ride-hailing platform Uber starting next year, the companies said, as the General Motors-backed robotaxi firm attempts a comeback, sending shares of the automaker up 2.2 per cent. – Additional reporting Reuters
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