Wednesday 7 December 2016

Iseq posts worst week since February amid Brexit turmoil

Published 19/06/2016 | 02:30

Patrick Coveney Picture: Gary O' Neill
Patrick Coveney Picture: Gary O' Neill

the Irish index of Irish shares posted its worst week since the second week of February, closing last Friday below the 6,000 point mark at 5,991.51.

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Kenmare Resources lost the most in the week in percentage terms at 27.5pc, while Paddy Power Betfair lost 7.26pc and Hostelworld lost almost 10pc. Heavily weighted Ryanair was the biggest drag on the index in losing just over 4.5pc, while Applegreen was one of the few gainers in the week, rising just under 3pc.

The result came despite a rally in the index on Friday, which closed up 1.56pc having finished just under 5,900 on Thursday.

It was a turbulent week for European markets, with the Brexit vote finely poised. Greencore chief executive Patrick Coveney said on Wednesday that his personal judgment was that the UK would vote to leave next week. On Thursday, campaigning was suspended after the murder of British MP Jo Cox.

"Brexit fear is starting to ease up a little, and the market was a little oversold," said Thorsten Engelmann, a trader at Equinet Bank in Frankfurt after Friday's rally.

"Even if Brexit should happen, the large declines in recent days mean that enough concern is still priced in."

European stocks have struggled to maintain momentum after rallying as much as 16pc from a February low to an April 20 high.

Polls indicating a lead for the UK's 'Leave' campaign weighed on the Stoxx 600 in recent days, dragging it lower in six of the past seven sessions.

Also worsening sentiment were a drop in oil prices, and concerns over monetary policy after the Federal Reserve and the Bank of Japan kept policies unchanged. While the Stoxx 600 was down 2.1pc this week, capping its longest stretch of declines since April, Friday's advance moderated the extent of the losses.

"It's the more the fact that Brexit risk has been taken off the table for a bit and the campaigns have paused, so it's a bit of a relief," said Jasper Lawler, an analyst at CMC Markets in London.

"It doesn't necessarily support the Remain camp, but it rather takes the focus off the referendum for a day after a week of intense focus."

Odds on the UK leaving the EU slid as low as 36pc on Friday, after hitting a record 44pc on Thursday, according to Oddschecker calculations based on bookmakers' quotes. Anxiety stemming from Brexit curbed demand for riskier assets over the past week.

(Additional reporting, Bloomberg)

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