'Sachs' factor works wonders
Irish shares advanced yesterday, in line with the rest of Europe, as better-than-expected figures from Goldman Sachs lured more investors back in from the sidelines of the market.
The Iseq Overall index jumped 1.7pc to 2,413.88 points.
Goldman Sachs surprised the markets by saying it earned $3.39 a share in the first quarter, beating the $1.64 estimated by analysts, as trading revenue outweighed asset writedowns.
Banks globally gaining confidence that the worst of the credit crisis is over, interbank lending rates show.
"We are not really looking into the abyss any longer," said Sandro Merino, the Zurich-based head of European wealth management research at UBS. "We are moving away from fearing a depression scenario."
However, AIB and Bank of Ireland remained out of sorts yesterday amid mounting fears the State may end up taking a majority stake in both as they write down billions of euro before transferring troubled property loans to the new National Asset Management Agency (NAMA).
Shares in AIB fell 6.2pc yesterday to €1.05, while BoI managed a slight rally late in the session to close up 2.4pc to 86c. AIB had soared almost four-fold and BoI more than eight-fold from their lows of early March in anticipation of last week's news.
Advance
Irish Life & Permanent continued to advance -- rising 12pc on the day to €2.15 -- as the group is set to avoid having to deal with NAMA, as it was not a real lender to the property development bubble. It is, however, the main mortgage provider in the State.
Dealers also noted some sizeable moves by a number of market minnows, albeit accompanied by small trading volumes. Boundary Capital jumped 33.3pc to 4c and Newcourt rose at a similar pace, to 4c, while Donegal Creameries added 15.6pc to €2.
National benchmark indexes rose in all 18 western European markets except Luxembourg. Germany's DAX Index gained 1.5pc. France's CAC 40 Index added 0.9pc, while the UK's FTSE 100 Index increased 0.1pc.
Barclays and UBS advanced more than 10pc after Goldman Sachs's figures.
"The US banks seem to be recovering," said Andy Brough, a London-based fund manager at Schroder Investment Management. The Goldman Sachs results suggest "things are getting back to normal".
European stocks pared some of their gains and the Standard & Poor's 500 Index declined as much as 1.6pc after US retail sales unexpectedly dropped in March.
Rio Tinto, the world's third-largest mining company, added 5.9pc and Xstrata gained 7.2pc as copper prices climbed to the highest in five months in London on speculation inventories will shrink on demand from China.
- Joe Brennan
