The Iseq index of Irish shares closed the day 6.7 per cent stronger as stocks surged on the back of yesterday’s announcement by the US government that it would take over mortgage giants Fannie Mae and Freddie Mac.
The Dublin market, in line with other European markets, opened strongly and held on to most of its gains throughout the day. It eventually closed 286.73 points up at 4,569.05 – making it the best performer in Europe.
Banks were among the most heavily traded stocks, while CRH also featured prominently, as investors returned to market on speculation that the US government decision would ease problems in the mortgage market and signal an end to the credit crunch.
But some traders urged caution, saying a key factor would be whether the rally could be sustained over the coming days.
“A big issue people will be watching over the next few days will be how the interbank markets react,” said one broker.
Financial stocks led the rally today as Irish banks outperformed their European peers, rising by more than 11 per cent.
Irish Life & Permanent was the star performer as it rose by 12.7 per cent, tacking on 82 cent to €7.28. AIB saw its share price rise by 11.5 per cent to close the day 91 cent stronger at €8.80, while Bank of Ireland added on 59 cent – a rise of 11.17 per cent. Anglo Irish Bank was 56 cent better off at €5.80, a gain of 10.7 per cent.
Construction stocks were also buoyed by the news from the US. CRH was one of the day’s biggest gainers as it ended the day €1.68 stronger at €18.89. Grafton also enjoyed strong trading as it added on 20 cent – a rise of 5.7 per cent – to €3.70, while Kingspan jumped 5.33 per cent, a rise of 41.5 cent to €8.20.
European stocks climbed the most since April, led by financial and construction companies, on speculation the US government’s takeover of Fannie Mae and Freddie Mac would shore up the mortgage market.
UBS, the European bank hardest hit by subprime-related losses, jumped 8.3 per cent and Germany’s Deutsche Bank surged 6.5 per cent
National benchmark indices rose in all 18 western European markets today. France’s CAC 40 gained 3.4 per cent, and Germany’s DAX added 2.2 per cent. Despite a computer glitch which curtailed trading on the London Stock Exchange for most of the day, the UK’s FTSE 100 rose 3.9 per cent.