US and European markets faced a dip on Wednesday, primarily due to concerns over the Federal Reserve’s plans for interest rate cuts, which subsequently led to an increase in treasury yields and negatively impacted stock values. Irish and European markets were no exception to the trend as the Iseq index dropped by 1.3% on the same day. This was in large part a result of a significant decrease in stock value of Ryanair, which sank by over 4.1% closing at €17.20 per share according to Dublin traders. Warnings from American airline companies also seemed to affect other airline companies including Ryanair’s UK rivals EasyJet and Aer Lingus, whose values dropped by 1.6% and 2.5% respectively during the session.
Banks in Ireland saw a decline too, with the Bank of Ireland experiencing a 1% decrease to €10.28 per share despite announcing the introduction of higher rate deposit accounts on Wednesday. Elsewhere, AIB fell by 2.1% with shares closing at €5.05 each.
Greencoat Renewables, recently under pressure, saw a drop of 2.8% resulting in a closure at 87 cents per share. Similarly, house manufacturers Glenveagh and Cairn Homes saw a reduction in their session’s stock values by 0.4% and 2.1%.
On Wednesday, London’s stocks also followed a downward trajectory due to the impact of higher US bond yields on the global stock market. The prominent FTSE 100 was down by 0.9% whereas the FTSE 250 fell 1.1%. There were a few companies that managed to resist the general trend. Distribution Services was up by 4.3% after Czech billionaire Daniel Kretinsky agreed to take over the Royal Mail owner with a deal of £3.57 billion (€4.2 billion). Oil giants Shell and BP also had a decent session, their value increasing by 0.8% and 0.4% respectively following a rise in oil prices.
Unfortunately, other businesses, including Ocado, weren’t as lucky. The online grocer ended up relegating to the FTSE 250 after its share value plummeted by another 12.3% in Wednesday’s trading.
Mining companies focusing on industrial and precious metals experienced significant losses, with giants such as Anglo American and Antofagasta experiencing decreases of 3 per cent and 1.8 per cent respectively. Rio Tinto followed suit by slipping by 1.9 per cent.
In Europe, the primary equity indices took a hit, including the Stoxx 50 by 1.3 per cent, and the pan-European Stoxx 600 declining by slightly over 1 per cent. These changes clearly indicate the market’s unease as regards the speculated trend of European interest rates.
Interestingly, German inflation exceeded predictions to climb to 2.8 per cent in May. Despite this, economists maintain that this rise was inevitable and should not concern the European Central Bank’s policymakers ahead of their upcoming interest rate verdict.
Among regional indices, the French Cac 40 Index saw the worst performance, dropping more than 1.4 per cent due to falling shares of luxury brands such as Kering. This also affected other luxury brands such as LVMH, the rival firm of Gucci’s owner, which decreased by 2.8 per cent. Other declines included Jameson’s owner, Pernod Ricard, by 2.4 per cent, and Essilor Luxottica, the owner of Ray-Bans, which fell by 1.6 per cent.
Across the Atlantic in New York, Wall Street also faced a rough patch. Investors were on their toes before a $44 billion sale of US Treasury notes which trailed two weaker auctions earlier in the week.
By the close of trade, the S&P 500 was down by approximately 0.7 per cent, with all of its leading sectors hitting a downturn. American Airlines plunged 15 per cent due to a disappointing future outlook, and UnitedHealth led industry setbacks with reports of hiccups in Medicaid. However, Marathon Oil saw a surge following the announcement of its acquisition by ConocoPhillips in a $17 billion deal.
Meanwhile, the tech-centric Nasdaq also fell back, after surpassing the 17,000 mark for the first time on Tuesday. Chip stocks were down by 1.9 per cent after being a significant contributor to the prior session’s gains. This information is as reported by Bloomberg and Reuters.