Business World

Saturday 23 September 2017

Early gains wiped out as investors get jittery

Maeve Dineen

Jitters returned to European markets yesterday, wiping earlier gains as confusion reigned among investors on how the technical details of the EU deal will be implemented.

Market rallies early in the day petered out as investors digested the scant specifics of the deal and concluded that the eurozone still faced huge challenges.

Following a strong day, the euro weakened against the dollar closing at $1.4361. Gold, considered a safe haven at times of risk in the money markets, rose about 1pc, nearing this week's record high of $1,800 (e1,260).

Spanish 10-year yields rose to 5.7pc and Italian yields climbed to 5.3pc.

Pressure

Benjamin Reitzes, senior economist with BMO Capital Markets, said it "appears that there is little here to keep markets from eventually putting renewed pressure on Italy or Spain, if they run into any speed bumps".

Investors widely consider Ireland as the best positioned of the three bailed-out countries to benefit from Thursday's deal -- and Irish yields fell back 44 basis points yesterday to 11pc.

Uncertainties over the US debt negotiations and the €109bn rescue package for Greece posed risks for the global economy, leaving investors hamstrung, analysts said.

Yields on Greece's two-year bonds, however, experienced their biggest single-day fall since the country joined the euro in 2001, as investors shrugged off a warning by ratings agency Fitch that Greece risked becoming the first western nation to default.

Irish shares rose as traders reacted positively to the deal.

By the close of trading, the ISEQ Overall Index had risen sharply to 2,927 -- a gain of 1.42pc, or 40.87 points.

That was the index's biggest one-day rise since early May.

The FTSE index of leading British shares closed up 0.4pc to 5,990, while France's CAC 40 rose 0.2pc to 3,825. Germany's DAX moved up just 0.1pc to 7,295.

Wall Street, meanwhile, edged down at the opening bell.

Irish Independent

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