Business World

Saturday 19 August 2017

Irish shares hit 11-month high but banks still suffer

AIB closed down 4.87pc at 22c. Photo: Getty Images
AIB closed down 4.87pc at 22c. Photo: Getty Images
Peter Flanagan

Peter Flanagan

IRISH shares hit their highest point in nearly 11 months yesterday, as gains across a wide range of stocks sent the Dublin market higher.

By the close, the ISEQ Overall Index stood at 3,025.81, a gain of 0.68pc, or 20.38 points. That was the highest closing level since June 22 last year.

Traders bought early and often, with exploration and mining stocks bucking the wider fall in commodity prices to have a particularly strong day.

Ilmenite miner Kenmare Resources led the market in percentage terms, closing up 6.88pc at 51c, while oil and gas explorer Dragon Oil added 2.48pc to finish the session at €6.16. Petroceltic climbed 5.43pc to 13c.

The food sector had a decent day, with Kerry Group gaining 1.28pc to hit an all-time high of €29.31 a day after a strong trading statement.

Greencore added 2.18pc to €1.13, but Glanbia slipped back, falling 2.47pc to €4.35 despite a positive IMS.

Banks

The banks had another tough day yesterday, as it emerged that Allied Irish Banks will inflict losses on some junior bondholders.

AIB closed down 4.87pc at 22c, but Bank of Ireland and Irish Life & Permanent were both hit as well. BoI fell 2.11pc to 23c while IL&P dropped 4.32pc to 13c.

Meanwhile, European stocks climbed for a second day as better-than-estimated results from Maersk to Hermes boosted confidence in the economic recovery.

National benchmark indexes climbed in 13 of the 18 western European markets. France's CAC 40 Index advanced 0.1pc, while the UK's FTSE 100 dropped 0.7pc and Germany's DAX slid 0.1pc. The Stoxx 600 index closed up 0.3pc.

"Outlook statements from companies are more positive than expected, showing companies are really confident," said Matthias Joerss, head of European strategy at Macquarie. "However, going forward, the earnings season will become less important and the sovereign debt crisis is still a main issue. We will also see slowing macro-economic leading indicators."

Maersk jumped 4.4pc after the company posted estimate beating first-quarter net income.

Hermes rallied 3.3pc, the highest price since October. The French maker of Birkin handbags and silk scarves reported first-quarter sales that increased 26pc, beating analysts' estimates.

Bourbon rose 5.2pc in Paris trading, the largest gain in almost a year. The owner of the second-biggest fleet of supply and crew ships for the oil industry reported a 24pc increase in first-quarter revenue.

London

In London, ITV retreated 5.3pc after the company said advertising sales will rise 1pc to 2pc in the first half.

That compared with an increase of 18pc a year earlier when marketing budgets rose for the soccer World Cup.

In Japan, the Nikkei rose for a second straight day, boosted by gains in companies that provided positive outlooks for the current business year such as Orix and NEC, while investors largely shrugged off slightly stronger-than-expected inflation data from China.

The market was also bolstered by resilient commodity shares, gained despite a brief drop in Brent crude prices after Chinese output and loan data hinted at slowing demand.

Many Japanese companies have failed to provide annual forecasts following the massive earthquake on March 11.

"Investors are aware that these figures are still rough estimates, but the fact that the firms decided to publish forecasts boosted investor confidence -- hence such big gains in them," said Hideo Arimura, a senior fund manager at Mizuho Asset Management.

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