Bad start gets worse for markets
Friday November 20 2009
It was a gloomy day on the markets in Dublin and the rest of Europe with shares retreating across the board from the start of trade.
The ISEQ Index was just one of 18 European markets to finish in the red as the index sank 39 points to close at 2868.
Benchmark stock indices retreated in all of the 18 western European markets, except Iceland. The FTSE 100 dropped 1.4pc and France's CAC 40 lost 1.8pc. Germany's DAX declined 1.5pc as Infineon Technologies AG sank. All 19 industry groups in the Stoxx 600 retreated yesterday and more than 90pc of stocks in the index fell.
In Dublin, almost all shares that traded finished lower. AIB was 2.24pc down despite analysts stating there would be no changes to forecasts as a result of the IMS (Interim Management Statement) earlier this week. More importance was attached to the European Commission's guidance on state aid to banks which borrowed heavily to expand. In particular Goodbody noted actions by KBC in relation to its Central and East European businesses. KBC is to divest or run down a significant number of businesses in the region, although it will continue to retain an important presence there.
However, unlike KBC, AIB did not leverage up to buy into Poland, so there is hope that it will not be forced to sell this profitable investment. Bank of Ireland was one of the few gainers, up a fraction or just 0.18pc at €1.66 while Irish Life & Permanent fell 7.78pc to €3.44.
Food stocks have had a poor week and this continued yesterday. After falling sharply in the wake of Wednesday's IMS, Glanbia dropped a further 2pc to €2.70. Kerry had its own IMS out yesterday but despite an upbeat assessment of the business the shares traded down slightly, falling 0.68pc to €20.25.
After rising in the last two sessions Kenmare finished unchanged. It issued an IMS this week and Davy noted that the good operational progress it has made at the Moma titanium mine should enable the share price to regain lost ground.
The London market lost 74.4 points to 5267.7 or 1.4pc in a poor session for the heavyweight sector as a stronger dollar weighed on commodities.
Figures showing higher-than-expected UK borrowing of £11.4bn in October did little for confidence, although there was some retail cheer after sales volumes grew at their fastest annual rate in 17 months.
But the mood among traders was fragile amid concerns that share prices had run ahead of the recovery -- bringing the Footsie's recent foray above the 5300 mark to an end.
Morrisons was one of the few blue-chips to defy the wider market sell-off as the supermarket's steady sales offset the defection of CEO Marc Bolland to Marks & Spencer, which gave back some of the gains made on news he would take the helm, shedding 9.3p to 380.7p.
- Pat Boyle
Irish Independent
