Fresh credit rating cuts pile more pressure on on exchange
Construction and banks lead falls on another day of few winners
Published 28/10/2010 | 05:00
IRISH shares continued their downward trend yesterday after various rating cuts on Irish businesses weighed on the market.
For the day, the ISEQ Overall Index lost 0.32pc, or 8.68 points, to close at 2686.09, continuing its pattern of small losses on light volume this week.
CRH led the market down after Dolmen stockbrokers cut its rating on the construction giant's stock from "buy" to "neutral" in anticipation of its interim management statement on November 9.
"Given the stock's current valuation when compared to peers and the overall market we view the risk/reward into results as being unfavourable," said analyst Stephen Taylor.
He added that there was scope for a further downgrade as he expected "the pricing environment to remain difficult, therefore placing margins under pressure".
By the end of the day's trading, CRH had lost 1.6pc to close at €12.30.
Unsurprisingly, Readymix joined CRH in negative territory, closing down 3.85pc at 25c.
The construction stocks were joined by the banks, which all lost ground during the day.
Allied Irish Banks slipped 2.43pc to 36c while Bank of Ireland slumped 1.37pc to 58c after Fitch put a "negative" rating on Bank of Ireland UK's debt.
Pharmaceuticals company Elan shipped 1.93pc after the company posted lacklustre results in the US.
As has been the case all week, winners on the day were few and far between, but some small caps had a good day.
Kenmare Resources rose 5.50pc to 21c after the mining company said it would resume operations at its Moma site in Mozambique. Earlier this month, an accident at the mine resulted in the apparent death of a local villager.
Oil and gas explorer Dragon Oil continued its good run of late, closing up 2.20pc at €5.01.
It was a bad day across the rest of Europe, with national benchmark indexes falling in 16 of the 18 western European markets after the software firm SAP and Heineken missed forecasts.
The UK's FTSE 100 dropped 1pc, France's CAC 40 retreated 0.9pc and Germany's DAX slipped 0.6pc. The composite Stoxx 600 fell 0.7pc.
"We see disappointing numbers coming in, like SAP this morning, and it will be hard not to have a correction," said Andreas Lipkow, an equity trader in Frankfurt.
"The market is very bullish on [earnings] numbers and there might be some disappointment there."
Heineken slid 4.3pc after the third-largest brewer said revenue excluding the effect of acquisitions fell 2.1pc in the third quarter, compared with the estimated 0.4pc drop.
SAP sank 2.8pc, the biggest drop since May. The software company reported Q3 net income of €501m, missing the €553m estimated by analysts.
Sportswear company Puma lost 3.8pc after two brokers cut their rating on the firm.