Markets positive for St Patrick’s Day on US stimulus measures

European markets edged into positive territory on St Patrick’s Day helped by stimulus measures in the US.

In the Republic the benchmark Iseq all-share index closed just 0.18 per cent lower, with domestically-exposed stocks taking the biggest hit. Dalata Hotel Group, the State’s largest hotel group, tumbled 11.06 per cent to €2.05, while housebuilders Glenveagh and Cairn Homes also took big hits as concerns over mass unemployment dented confidence.

Dublin traders described the day as volatile with a “herd mentality” in the markets, which saw wide-ranging moves on the day.

However, help came from the US Federal Reserve, which said it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the coronavirus have grown in recent days.

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A view that Covid-19 is being taken seriously by the US eased concerns late in the day, and Irish traders will watch the American indices to establish how local markets will move in the coming days.

In London, the FTSE 100 index closed in the green, up by 2.79 per cent despite spending a significant part of the morning session in the red.

European shares rose on the day, coming off a near seven-year low helped by stocks in Spain, which announced a bumper stimulus plan to combat the economic shock of coronavirus.

The pan-European STOXX 600 index closed up 2.3 per cent after seesawing earlier in the day, following a dramatic sell-off on Monday.

It was buoyed by Spain’s Ibex 35 which rose about 6.4 per cent, marking its best day since 2010 as investors lapped up a €200 billion package of measures unveiled by Spanish prime minister Pedro Sanchez.

Disruptions

The plan soothed markets that have been blindsided by widespread shutdowns and disruptions in the wake of the virus outbreak, with poorly received central bank measures and tumbling oil prices adding to the pain.

“What this does underscore is that markets want to see firm action, and this is an example of that. I think it’s positive that we’re seeing the first steps in really massive measures,” said Elwin de Groot, head of Macro Strategy at Rabobank in Amsterdam.

French stocks ended 2.8 per cent higher after president Emmanuel Macron sought to reassure businesses by offering more fiscal aid.

Frankfurt shares shrugged off a weaker-than-expected business sentiment reading and closed about 2.3 per cent higher.

Data showed German investor morale at lows last seen in the 2008 financial crisis, and rating agency S&P Global warned the inevitable global recession this year would lead to a spike in defaults.

Gold snapped a five-session decline on the funding effort, and stocks on Wall Street rose as the move eased growing fears of a liquidity crunch due to coronavirus.

Group of Seven finance ministers are expected to hold a call on Tuesday night, though markets want to see fiscal stimulus and signs that the virus will not snowball out of control.

– Additional reporting: Reuters/PA