Investor optimism reflected in the markets

OPTIMISM amongst investors over some kind of solution being found by policymakers to stem the debt crisis in the eurozone saw gains on most international markets yesterday.

European Central Bank (ECB) policymakers are next week expected to debate restarting their covered-bond purchases along with further measures to ease monetary conditions.

The boost to stock markets coincided with shaky movement on commodity markets, however, with oil initially falling by 3.4% to its lowest price level in over six weeks before recovering by 0.5%; and gold falling for a second consecutive day, to $1,535 per ounce — well down from its high of $1,877 just four weeks ago.

On currency markets, Asian scepticism over measures being taken to correct the eurozone crisis, saw the euro hit a ten-year low against the yen. But, despite hitting an initial eight-month low against the US dollar, the euro yesterday finished up by 0.5% against the greenback.

The Bloomberg news service noted that the single currency has remained above its average value since being created nearly 12 years ago, a sign, it said, that foreign exchange traders see little chance of it collapsing.

Back on the stock markets, the day started bleakly with further falls in Asia (Tokyo’s Nikkei down by a further 2% and the Hang Seng in Hong Kong losing 1.5%) as investors remained unconvinced about positive talk coming from Europe.

However, early trading in the US saw marginal gains on Wall Street.

In Europe, London’s FTSE-100 was up by just under half a percent; by far the lowest gain amongst the continent’s leading bourses.

France’s main exchange, the CAC-40 index was up by 1.75% on the back of news that the French government could be on the brink of recapitalising the country’s creaking banks; the Borsa Italiana in Milan started the week with a 3.32% rise; the DAX in Frankfurt was up by 2.9%; and Spain’s IBEX gained 2.56%.

In Dublin, the ISEQ also started the week in an upward direction, finishing the day up by just over 1.5%, having been ahead by over 2% in earlier trading during the session. There were good gains for stalwart stocks such as CRH, DCC, Elan and Aryzta — the latter having issued a strong set of annual results earlier in the day.

Fallers, however, included Tullow Oil, C&C, Icon, Glanbia, Paddy Power, Petroneft and Kingspan.