Irish shares dropped on Thursday, with the Iseq counting as the second-worst performing equities index across Europe and banking stocks among the main decliners as the UK flirted with a no-deal Brexit a little over a week before it is due to leave the European Union.
The Iseq index fell by 1.3 per cent to 6,125.99, with its decline beaten only by Luxembourg’s main market index. However, the pan-European Stoxx 600 index managed to close just marginally in the red, down 0.04 per cent at 380.69.
DUBLIN
Banks were out of favour, with Permanent TSB off 6.5 per cent at €1.22, AIB down 5.4 per cent at €3.86, and Bank of Ireland falling 4.9 per cent to €5.37, as investors braced themselves for the UK potentially crashing out of the EU without a deal on March 29th.
It emerged around the time European markets were closing that the EU is preparing to offer UK prime minister Theresa May a two-month delay on Brexit on the condition that parliamentarians approve a withdrawal agreement next week, which is anything but a given.
The banking sector was also depressed as it emerged after European markets closed on Wednesday that the US has abandoned plans to raise interest rates again this year. Banks’ lending margins are squeezed in a low-interest rate environment.
A fresh drop in the value of sterling – by as much as 0.9 per cent against the euro to 87.23p – weighed on Irish Continental Group, which lost 2.9 per cent to €4.95, and Dalata Hotel Group, which dipped 0.7 per cent to €5.70.
LONDON
However, sterling’s latest battering – which also extended to its rate against the dollar – helped boost London’s FTSE 100, which is dominated by exporters. The index closed 0.9 per cent ahead at 7,355.31.
Shares in Next added 2.6 per cent after the clothes retailer reported full-year results which were in line with expectations.
However, Ted Baker shares nosedived after the fashion chain's profits slumped as the firm grapples with a scandal that pushed its founder to resign, as well as a competitive retail environment.
Engineering firm Renishaw's shares also plunged 11.2 per cent after it lowered profit expectations due to dwindling demand in Asia. Demand from Asian customers for the company's encoders – measurement devices – has dwindled in recent months.
EUROPE
Banking stocks were also out of sorts across Europe, with Deutsche Bank dropping 4.1 per cent and Commerzbank declining by 3.4 per cent as investors continued to assess the outcome of a possible merger between both.
EssilorLuxottica's shares slumped 6.6 per cent on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian eyewear group's executive vice chairman of a power grab.
Investors punished HeidelbergCement, the world's second-largest cement maker, after published results. The stock fell 1.3 per cent.
NEW YORK
US equities were higher in early afternoon trading as investors digested a dovish lurch by policymakers in the world’s largest economy. The dollar rebounded after Wednesday’s loss, while government bond yields retreated.
After the Federal Reserve announced on Wednesday that it had no plans to raise rates in 2019, stocks seem poised to resume their upward charge, according to traders. The S&P 500 Index enjoyed a broad-based advance that saw tech shares climbing alongside materials and real estate.
Financials sat out the rally as the yield on 10-year Treasuries hovered near the lowest level in more than a year.
Shares in Levi Strauss surged 36 per cent in their market debut, giving the jeans maker a market value of almost $9 billion and suggesting strong investor appetite before much-awaited listings from Lyft and Uber.
Levi accounted for 5 per cent of the global jeans market in 2018, according to market research firm Euromonitor.
– Additional reporting: Reuters, PA
