Profit-taking dampens new year rally

The new year rally didn’t quite run out of steam yesterday but it was slightly less energetic as investors took profits while wondering how robust the US budgetary deal actually was.

Tempering this was news that the latest US employment numbers had beaten estimates, even as the country’s fiscal cliff beckoned.

DUBLIN

The Dublin market held its head above water, having gained 1.75 per cent on Wednesday. Shares closed 0.64 per cent ahead last night, with gains fairly evenly spread.

CRH was the main newsmaker, telling investors it had spent €375 million on development activities in the second half of 2012. Having gained on Wednesday, shares shed 1.45 per cent or 23 cent yesterday, finishing at €15.62.

Market gossip focused on an Indian news report that the company could be negotiating the purchase of a stake in Indian cement firm Sree Jayajothi Cements.

Ryanair was a star performer, attracting good demand towards the close. The airline closed 13.2 cent stronger at €4.89. Stablemate and takeover target Aer Lingus fell by 0.2 cent to €1.128.

Smurfit Kappa was solid, rising by seven cent to €9.25, despite data showing weakness in paper prices since Christmas.

In financials, Permanent TSB added 13 per cent, or 0.3 cent, to close at 2.6 cent after saying it had sufficient resources to cover an upcoming bond repayment.

Focus today will be on a Davy-hosted conference in New York, with top executives from companies such as Kerry, Glanbia, DCC, Smurfit Kappa and Bank of Ireland all presenting. Some firms have also participated in marketing trips to cities including Boston and Toronto in advance of the conference.

LONDON

The FTSE rallied in the afternoon yesterday, closing at a fresh 17-month high on the back of the positive US jobs data. The FTSE 100 had edged lower in morning trade, but added 0.3 per cent in 15 minutes after the US employment numbers were released.

London’s blue-chip index closed up 19.97 points, or 0.3 per cent, at 6,047.34, having hit its highest level since July 2011 on Wednesday after the fiscal cliff was avoided in the US.

Oil and gas stocks gained 1.3 per cent, and energy added the most points to the index, contributing 13 points to gains.

High-street retailers were given a welcome boost by a strong festive trading update from Next, which led blue-chip gainers.

EUROPE

Euro-area stocks declined from a 17-month high amid concern over the US budget deal.

The Euro Stoxx 50 Index of the euro area’s biggest companies had fallen 0.4 per cent to 2,701.22 at the close of trading. The broader Stoxx Europe 600 Index added 0.5 per cent to reach its highest point since February 2011, as the Swiss Market Index jumped 2.9 per cent after opening for the first time since December 28th.

National benchmark indexes gained in 15 of the 18 western- European markets. France’s Cac 40 index and Germany’s Dax each slipped 0.3 per cent.

NEW YORK

US stocks dipped yesterday after signs the Federal Reserve has growing concern about its highly stimulative monetary policy, giving investors reason to pull back after a rally.

The minutes from the Fed’s December policy meeting showed increasing reticence about adding to the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.

The Fed’s policy of easy credit has helped push the SP 500 to a 13.4 percent gain in 2012. Ending that policy would remove an incentive for investors to buy riskier assets like stocks.

Stocks pushed the S&P 500 index 4.3 per cent higher in the previous two sessions. Investors turned their focus to coming battles in Congress, including the likelihood of bitter fights over budget cuts and raising the federal debt ceiling. – (Additional reporting Reuters)