Dublin dealers breathed a sigh of relief yesterday as the Iseq index of Irish shares put in a stellar performance, outperforming its European peers on the upside, and adding €3.3 billion to its value. Claire Shoesmithreports.
The gains were prompted by overseas sentiment as investors speculated that the US Federal Reserve will lower interest rates, but for once the Irish market refused to be left behind.
Boosted by a bullish outlook statement from Anglo Irish Bank earlier in the week, the Iseq index of Irish shares added 3.6 per cent, yesterday to close at 7,207, its highest closing level in almost a month.
This week the index has gained 8.8 per cent, a move that has added €7.5 billion to its value.
Elsewhere, European markets were also in positive territory, with stocks in the region recording their biggest weekly gains since June.
National benchmarks rose in all 18 western European markets with Britain's FTSE 100 adding 1.3 per cent, Germany's DAX closing up 1.4 per cent and France's CAC-40 gaining 1.3 per cent.
"People are convinced the Fed is going to cut rates," said Ed Collins, who helps manage about $41 billion at New Star Asset Management in London.
"They want rate cuts to stabilise the economy. There are real fears of a US recession."
This speculation follows comments by Federal Reserve chairman Ben Bernanke, who said late on Thursday that "renewed turbulence" in markets may have shifted the risks between growth and inflation.
Closer to home dealers said the previously announced reweighting of the Morgan Stanley Capital International (MSCI) indices, which kicked in at the close of play yesterday, had also helped trading sentiment.
As a result dealing in some stocks - namely C&C and Independent News & Media - was significantly heavier than usual.
Both stocks have fallen out of the index, a move that will reduce their popularity among fund mangers.
Conversely Smurfit Kappa and Anglo Irish Bank have both been included in the index following the reweighting.
Anglo was a significant gainer yesterday, though dealers attributed part of the momentum to the group's positive full-year results released earlier in the week.
Its shares rose 7 per cent, to €11.90. AIB meanwhile added 4.1 per cent, to €15.30, Irish Life & Permanent jumped 7.8 per cent to €13.56 and Bank of Ireland closed up 2.4 per cent, at €10.90.
US stocks also put in good gains and as of midday were heading for their biggest weekly gain in two months.
Traders attributed this too to the belief that rates may be cut. - (Additional reporting Bloomberg.)
