Saturday 27 May 2017

FTSE races up as sterling plunges

Traders work on the floor of the New York Stock Exchange (NYSE) as the market closes in New York
Traders work on the floor of the New York Stock Exchange (NYSE) as the market closes in New York
Donal O'Donovan

Donal O'Donovan

Sterling slumped to a three-year low against the euro yesterday as Britain set a March deadline to start divorce proceedings from the European Union, while worries over Deutsche Bank and Europe's banking sector kept share prices in check.

British stocks were the standout performers in Europe, lifted to an 18-month high by the pound's broad and deep weakness and figures showing the fastest rise in UK manufacturing output in more than two years.

Apart from Britain's FTSE, however, Europe failed to follow Asian stocks' solid start to the fourth quarter.

In Ireland the Iseq index closed barely higher at 6,037.46.

While factory data from across the Eurozone supported European shares, banking jitters weighed heavily. On top of Deutsche's travails, Dutch lender ING said it would slash 7,000 jobs and Portugal's central bank governor said the country's banks were in dire need of capital hikes.

Oil's push above $50 a barrel for the first time since mid-August on the back of last week's Opec agreement to curb output caught investors' eye. But the main focus was on sterling's adverse reaction to the latest twist in the Brexit saga.

This helped the FTSE 100 index of leading British shares rise more than 1pc to 6,986 points. A weaker pound is a boon for British exporters, as well as the firms that earn the bulk of their earnings overseas and which dominate the FTSE.

In Dublin Providence Resources shot up 20pc to 13.3 cents a share, after a relatively positive assessment from Merrion Stockbrokers. Permanent Tsb shares were up 5.4pc at €2.166 each after Davy upgrades stock to "outperform," equivalent to "buy".

Irish Independent

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