Ireland's Iseq stocks index declined on Wednesday, dragged down by market heavyweights AIB and Ryanair, as global markets were generally underpinned ahead of the signing of an initial US-China trade deal.
Still, investors betting on a quick de-escalation of US-China tensions were dealt a blow when US Treasury Secretary Steven Mnuchin said tariffs on Chinese goods would not be repealed until the completion of a Phase II agreement.
The Iseq ended the session down 1.1 per cent at 7,169.88, while the pan-European Stoxx 600 index closed little changed and the FTSE 100 in London edged 0.3 per cent higher.
Dublin
AIB lost 3.1 per cent to €3 after analysts in Barclays downgraded their view on the stock to the equivalent of a sell, highlighting risks of a dividend cut on 2019 earnings and likelihood that the bank will have less excess capital to hand back to shareholders in the coming years than the market has been anticipating. Rival Bank of Ireland dropped 0.4 per cent to €4.65.
Ryanair was also out of sorts, declining by 2.14 per cent to €15.56, amid profit taking from some investors following the carrier’s share price surge last week on the back of a company earnings forecast upgrade.
CRH lost 1.9 per cent to €34.49, while FBD Holdings declined by 2.8 per cent to €8.26.
Bucking the trend, housebuilders were in vogue, with Cairn Homes up 0.8 per cent at €1.30, while Glenveagh Properties increased by 0.2 per cent to 87c.
London
Banks suffered across the board as weak inflation data further spurred hopes that the Bank of England will cut interest rates in its January meeting. Low interest rates squeeze a lender’s margins.
Royal Bank of Scotland, which also had its rating downgraded by Barclays, led the sector lower, with its share price falling 2.5 per cent.
Tullow Oil plunged 15.7 per cent as it said it expects to report pre-tax impairments and exploration write off of about $1.5 billion (€1.34 billion) on the back of a reduction in its long term assumption of the price of oil.
Keeping a lid on losses on the midcap bourse, Provident Financial jumped 7 per cent after its key credit card business enjoyed a better-than-expected fourth quarter and Hochschild Mining climbed 3 per cent on better-than-expected 2019 production.
Among smaller stocks, fast fashion retailer QUIZ tanked nearly 20 per cent on its worst day since June, as it pointed to poor trading over the key Christmas period.
Europe
Dutch semiconductor supplier ASM International jumped 8.6 per cent, to the top of the STOXX 600, hitting a record high after it reported a strong fourth-quarter order intake.
Automobile stocks were the worst performers in the euro zone, shedding 1.7 per cent.
German car parts maker Hella GMBH extended losses to a second session after it posted lower first-half earnings and warned that a strong market recovery was unlikely.
Germany’s main stock index, the Dax, fell about 0.2 per cent after the EU’s biggest economy marked a gross domestic product (GDP) growth of 0.6 per cent in 2019, the weakest expansion rate since 2013.
New York
The S&P 500 and Dow Jones Industrial Average indices set fresh record highs on Wednesday after White House economic adviser Larry Kudlow said negotiations on a Phase II trade deal between the US and China will begin as soon as the first phase was signed later on Wednesday.
Meanwhile, disappointing earnings updates from Bank of America and Goldman Sachs weighed on the S&P 500 banking sector.
Bank of America Corp reported better-than-expected quarterly profit, but warned that of weak net interest income in the first half of 2020, knocking its shares.
Goldman Sachs reported a bigger-than-expected fall in profit as it set aside more money to cover legal costs.
Retailer Target Corp slumped after it missed its own expectations for 2019 holiday season sales, blaming weakness in toys and electronics sales. Larger rival Walmart also fell. – Additional reporting, Reuters.
