Markets rebound on Italy bond auction

International stock markets rebounded yesterday after Italy ended a successful bond auction, despite suffering a two- notch credit downgrade by ratings agency Moody’s.

The Italian government successfully raised €3.5bn via the three-year bond sale, with the interest rate on its debt reducing from 5.3% to 4.65% since its last auction in June. It came less than 24 hours after the downgrade — from ‘A3’ to ‘Baa2’ — by Moody’s.

The immediate effect was an uplift across the major European bourses, with investor jitters easing considerably and markets hitting a one-week high.

The best rise was in Frankfurt, where the DAX jumped by 2.15%, or 138 points, to close the week at 6,557 points. In Paris, there was a 1.46% rise, while London’s FTSE index was up by just over 1%.

All the main European markets were up — including the Iseq in Dublin, which rose by 1.1% to just under 3,200 points. Among the strong performers were drinks group C&C, Ryanair, and Independent News & Media.

However, there were falls for the likes of Irish Continental Group, CRH, United Drug, and Aer Lingus.

Good early gains were also evident on Wall Street, with the Dow Jones and Nasdaq up by between 1% and 1.5% in early trading. Earlier, the main Asian markets closed up — Tokyo’s Nikkei index by just five basis points and Hong Kong’s Hang Seng by 0.35% — on the back of better-than-expected Chinese growth figures