Earnings optimism helps lift ISEQ
IRISH shares rose yesterday, recovering some of the losses sustained last week, as encouraging earnings news raised expectations that this week's horde of results could be positive.
For the day, the ISEQ Overall Index gained 0.9pc, or 24.75 points, to reach 2780.87. Construction and food stocks led the way, as traders were buoyed by excellent half-year results from Kingspan and low bond yields made expansion easier.
Building materials group Kingspan jumped 5.73pc to €5.37 after it recorded a 9pc increase in operating profit for the first half of the year, only months after forecasting a fall of 10pc. Those results comfortably beat expectations and gave hope that this week's round of results may not be as bad as feared.
"Kingspan's outlook comments are quite positive as it has indicated that the improvements evident in Q2 have continued into the third quarter," said Flor O'Donoghue of Davy Stockbrokers.
Kingspan's results also helped lift construction giant CRH, which regained the €14 level in anticipation of its results this morning. The stock rose 0.97pc to €14.03.
Food stocks were another sector that had a good day amid speculation that with low bond prices it would be easier to finance corporate expansion.
Kerry Group, which recently agreed terms to acquire Newmarket Creameries, grabbed 1.45pc to finish at €24.55, while Glanbia, which reports tomorrow, jumped 1.81pc to €3.38. Donegal Creameries ended the day up 5.26pc at €3.
Few stocks appeared on the other side of the board yesterday. Smurfit Kappa Group, however, lost 3.25pc to fall below €7, closing at €6.96, while toolmaker Oglesby and Butler continued its recent struggles, falling 3.13pc to 31c.
Around Europe it was a good day, with national benchmark indexes climbing in all 18 markets. The UK's FTSE 100 and France's CAC 40 advanced 0.8pc. Germany's DAX rose 0.1pc. The composite Stoxx 600 advanced 0.6pc.
"We expect Europe's outperformance to continue," said Ian Scott, a London-based strategist at Nomura.
In London, the South African savings group Old Mutual climbed 3.2pc after saying it might sell 70pc of its Nedbank Group banking unit to HSBC. Mining companies BHP Billiton and Rio Tinto rose 0.6pc and 0.5pc respectively amid speculation that a proposed mining tax in Australia may be scrapped after the ruling Labour Party failed to win a majority at the weekend election.
"The FTSE has put in a fantastic performance," said Manoj Ladwa, a senior trader at London-based ETX Capital Research. "But the feeling remains that this could be a dead cat's bounce, as, once again, the rally has been accompanied by low volume."