Friday 22 September 2017

ISEQ defies Europe-wide falls as investors worry on Greek crisis

Getty Images
Getty Images
Laura Noonan

Laura Noonan

THE ISEQ managed to defy a sea of red across European bourses yesterday, with the Dublin index closing up 0.4pc despite the increasingly perilous situation in Greece and the deepening Spanish banking crisis.

Ryanair was one of the main drivers of the positive ISEQ return, as shares in the airline rose 1.3pc to €4.41.

The day's news-flow included an announcement that the Government is to separate Shannon Airport from the Dublin Airport Authority, something that may benefit Ryanair in the form of lower airport charges.

Ryanair investors may also have been reassured by EasyJet's first-half results, which delivered a pre-tax loss at the better end of investor expectations and showed rising revenue (see above).

Swiss food giant Aryzta, which maintains a Dublin listing, rose 1.2pc. Datalex rose an impressive 11.8pc, but that wouldn't have had much of an impact on the market since the ISEQ's return is market capitalisation rated and Datalex has a market value of just over €40m.

Construction giant CRH closed up about 1pc at €14.29 after the company issued an interim management statement admitting that the first half of the year had been broadly in line with 2011 but said progress would be made later in 2012.

Glanbia rose 0.36pc after its management told an annual shareholders meeting that the dairy and nutritionals giant still remains on track to hit earnings expectations.

Ireland's financials weren't able to avoid the sea of negative euro-noise, and Bank of Ireland's shares closed below the symbolically important 10c level for the first time since January.

This means that investors who bought into last summer's recapitalisation at 10c a piece are now under water, quite a turnaround from early February when they were sitting on paper profits of more than 30pc.

Irish Life & Permanent's shares took a more dramatic- battering, falling 12.5pc to close at 3.5c. The fall reflects the tiny volume of shares changing hands (709,000 at a value of €25,000) as well as the low absolute price of stock.

Events on the currency market were more dramatic as the euro hit a three-month low against the dollar. The single currency traded at $1.291, its lowest since January 23, but recovered to close at $1.2954.

Plunge

The plunge came as investors became increasingly sceptical about Greece's ability to implement a massive austerity programme.

Yesterday, some reports claimed the EU was considering withholding the next €5.2bn due under Greece's bailout programme, something that could trigger a disorderly default and the first eurozone exit.

Spain's banks were also a major cause of concern amid reports that lenders would have to set aside another €45bn to cover bad loans and nationalise its fourth largest lender Bankia.

Prime Minister Mariano Rajoy said he would announce financial reforms to "help solve a lot of Spain's economic problems" tomorrow [Friday], but wary investors dumped debt.

The eurozone spill-over permeated most of Europe's bourses, with the FTSE 100 closing down 0.44pc having pared back heavier losses earlier in the day, while France's CAC 40 closed down 0.2pc, and the EuroStoxx index closed off 0.47pc.

A notable exception was Germany, where the Dax closed up 0.47pc. German bonds were also in high demand, pushing yields down as investors embraced a flight to safety.

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