On Thursday, the Iseq saw a slight decrease of 0.48 per cent. This news aligns with the downtrend in UK stocks, as investors took in the particulars of the recently-disclosed UK budget.
Down in Dublin, the financial scene held mixed results. AIB experienced a rise in value of 1.37 per cent to €4.89. Conversely, the Bank of Ireland’s value dipped by 0.33 per cent to €8.46. Dalata Hotels witnessed an uptick of 1.42 per cent, settling at €4.28. In terms of food-related stocks, both Glanbia and Kerry Group suffered losses, dropping 2.18 per cent to €15.25 and 1.93 per cent to €91.50 respectively. A slight increase of 0.23 per cent to €17.59 was observed for Ryanair. Kingspan saw a minimal decrease of 0.19 per cent to €80.65. The house construction sector saw good news as Glenveagh’s value climbed 1.27 per cent, equalling €1.60.
Across the waters in London, the leading UK stock indices descended to a near three-month nadir as the likelihood of rate slashes from the Bank of England (BoE) was reduced by investors following the fresh high-expenditure budget format, resulting in inflation concerns.
The esteemed FTSE 100 index declined 0.6 per cent whilst the more local FTSE 250 decreased by 1.5 per cent. Both indices reached their lowest since the 8th of August and seemed destined for month-end deficits. Stocks for rate-sensitive housebuilders fell notably about 6 per cent as the UK’s short-term borrowing rates shot up.
The country’s newly-appointed finance minister, Rachel Reeves, heralded the largest tax hikes in thirty years in her inaugural budget, citing hefty spending required to rejuvenate national public services. The UK’s autonomous budget predictor implied her approach would provide a temporary boost to the global economy’s sixth-largest participant but would simultaneously stimulate inflation, triggering investor restraint on predictions for swift BoE rate curtailments within the forthcoming year.
Traders are persisting with their prediction that a 0.25 per cent decrease in rates will be announced by the central bank on November 7th. There was a significant plummet in value for British medical technology manufacturer Smith and Nephew, who experienced a decline of 12.5 per cent, the largest amongst FTSE 100 constituents, following its revision of the annual growth projection for underlying revenue.
In Europe, the Stoxx 600 saw a decline of over 1 per cent on Thursday, marking the most significant monthly reduction in a year. This was primarily driven by dismal company returns and pending clarification on macroeconomic situations, and the US election’s outcome. The chief European stock index ended 1.2 per cent below with retail companies pioneering a total market decline, recording a 4 per cent fall. The technology and real estate sectors were the worst hit in the month’s sell-off, and this resulted in a monthly decrease of 3.4 per cent for the Stoxx 600. The Cac 40 index from France was the monthly underperformer amongst its regional counterparts.
Apprehension emerged following an unexpected surge in Eurozone inflation in October, with potential for continued increase in the succeeding months. This augment the argument for a careful approach to the European Central Bank’s relaxation of monetary policy, following the 25 bps cut in interest rates this month.
Wall Street experienced a decline on Thursday; with caution about escalating AI expenses from Microsoft and Meta platforms tempering the excitement for megacap shares, the key drivers for this year’s market rally. Facebook-owner Meta Platforms saw a 4 per cent decrease in shares, and Microsoft’s shares slipped 5.6 per cent, despite both businesses reporting better than anticipated earnings post-market on Wednesday. The yield on the central 10-year Treasury note also increased beyond 4.3 per cent, adding further strain on shares.
The Federal Reserve’s primary measure of inflation, the Personal Consumption Expenditures price index, saw a rise in September of 0.2 per cent, mirroring economists’ predictions. However, the core figure was slightly higher than expected at 2.7 per cent year on year, compared to the forecast of 2.6 per cent. Consumer spending also saw a slight increase beyond projections. Following the release of these figures, traders maintained their expectation for a 0.25 per cent reduction in the Fed’s rates in their November meeting.
Microsoft and Meta have both communicated that their financial expenditures are on the rise due to investments in artificial intelligence. This could potentially affect their profit margins, particularly at a time when their investors are seeking immediate returns on the billions that have already been deployed. Information from other sources also contributed to this report.