Thursday 23 February 2017

BoI fears cancel out optimism from Europe

Joe Brennan

Irish shares ended yesterday's session virtually unchanged as upbeat sentiment across Europe was offset by fears Bank of Ireland (BoI) faced having to issue a massive amount of shares to the State in lieu of a cash dividend due on its preference share investment.

Investor worries were confirmed after the markets closed, when the bank announced the State will take a 15.7pc stake in the group from Monday.

The ISEQ Overall Index closed down less than 0.1pc at 2,967. BoI dropped 3.1pc to €1.26. Rival Allied Irish Banks advanced 2.75pc, given that its dividend payment to the State isn't due until mid-May.

The hope is that Brussels will have decided on the banks' restructuring plans by then, paving the way for AIB to make its dividend payment in cash, rather than shares.

Dealers said that markets across Europe took in their stride the unexpected news on Thursday night of the Federal Reserve increasing its discount rate, signalling a retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression.

Food ingredients companies were well bid after Nestle, the world's largest food company, said its organic revenue from food and beverages will rise this more more than 2009's 3.9pc.

Kerry Group tacked on 2.5pc to €22.38, while Glanbia added 3.1pc to €2.58. In Zurich, Nestle soared 2.4pc to hit levels not seen since December 2007.

France's CAC 40 gained 0.6pc as did the UK's FTSE 100. Germany's DAX added 0.7pc.

Sentiment was helped by news that the cost of living in the US rose less than anticipated in January, indicating restrained inflation will allow Fed policy makers to maintain a low, overall interest-rate stance despite its unexpected move no the discount rate.

Shire jumped 4.6pc in London after unexpected royalties and rebates on the Adderall attention deficit pill helped the drugmaker to beat fourth-quarter profit estimates.

Rentokil Initial surged 9.9pc after the world's largest pest-control company said it more than doubled full-year profit in 2009. PagesJaunes, the French yellow-pages company, rose 7.5pc after posting full-year earnings that beat analysts' estimates.

Thales slumped 12pc after Europe's largest military electronics maker cut its dividend.

Carrefour, Europe's largest retailer, retreated 2pc after saying net income from recurring operations plunged on impairment charges linked to closing stores in Italy and refurbishing outlets elsewhere in Europe.

Irish Independent

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