European markets in the green but Iseq trades lower

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European stock markets were largely trading higher on Wednesday afternoon despite markets remaining on edge as Asian equities pared their advance while US futures retreated.

Ireland’s Iseq overall index was, however, bucking the wider European trend and was off by 0.17 after midday. Amongst the lunchtimes losers were packaging company Smurfit Kappa, Ryanair and AIB, all off by between 3.86 and 2.46 per cent.

There was very light volume on the positive end of the Iseq with the exception of Glenveagh properties which had almost 3.4 million trades executed by lunchtime and was trading up by 0.3 per cent.

London’s FTSE 100 index was up by 0.98 per cent after midday, Germany’s Dax up by 0.7 per cent and France’s Cac 40 index up by almost half a per cent.

The wider pan-European Stoxx 600 index was also in the green, up by 0.82 per cent. Investec and Dealz-owner Steinoff were among the lunchtime winners.

Dublin market has volatile day influenced by wild trading in US

Volatility reigns although feared global wipeout partially stalls

Stock markets: more volatility may lie ahead

US stocks were set to open more than half a per cent lower on Wednesday, an almost 2 per cent gain in the previous session failing to calm the nerves which drove Wall Street’s biggest intraday fall on record on Monday.

All three of Wall Street’s main indexes were on course for falls of between 0.5 per cent and 0.7 per cent, according to volatile premarket futures trading.

A wild session on Tuesday saw the Dow Jones Industrial Average swing more than 1,100 points from peak to trough and ended with the benchmark S&P 500 tallying its best day since just before president Donald Trump’s election in 2016.

Traders are bracing for higher volatility as they try to figure out if the swings of the past two days are the start of a deeper correction or just a temporary blip in the US market’s nine-year bull run.

The pivotal gauge of S&P 500 volatility, the VIX, opened at a relatively elevated 31 per cent. The VIX on Tuesday hit a more than two-and-a-half year high above 50, after trading, on average, below 20 for months.

Some investors fear that the market is over-stretched in the context of higher inflation and rising bond yields as central banks withdraw their easy money policies of recent years. US 10-year yields rose back as high as 2.80 per cent after approaching two-week lows around 2.65 per cent on Tuesday . They were last trading at 2.76 on Wednesday.

Yields on Germany’s 10-year government bond, the euro zone benchmark, were around 0.69 per cent, having dropped to 0.66 per cent on Tuesday. But that yield has more than doubled since early-December as the European Central Bank halved bond purchases at the start of 2018 and is expected to completely wind them down in September.

Earlier in Asia, Japan’s benchmarks eked out slim gains at the close after retreating from the session’s highs, while Chinese shares dropped. The dollar was flat as most commodities rallied.

Amid a slew of calls to “buy the dip,” investors will be watching Wednesday’s auction of 10-year Treasuries for clues on where markets go from here.

– Additional reporting: Reuters

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