Friday 20 October 2017

ISEQ falls on debt repayment fears

Bank of Ireland slumped 6.92pc to 54c. Photo: Bloomberg News
Bank of Ireland slumped 6.92pc to 54c. Photo: Bloomberg News
Peter Flanagan

Peter Flanagan

IRISH shares continued their downward trend yesterday as the fears about the country's ability to pay back its debts continued to worry the market.

On the day, the benchmark ISEQ Overall Index dropped 0.85pc, or 22.79 points, to 2,660.15.

The yield on Irish 10-year bonds hit 6.9pc before falling back and the spread against German Bunds blew past 4.6pc.

The price of Irish credit default swaps, a measure of how much it costs to insure against an Irish default, hit a record 521bps. A spokesman for the EU Commission denied they were planning emergency funding for Ireland.

"It's a key test for the market," said Greg Venizelos, a credit strategist at BNP Paribas in London. "The cost of the Anglo Irish bailout is too high for Ireland to afford without jeopardising its fiscal position."

As has been the pattern since the latest phase of financial crisis took hold, the banks all took a hammering. Bank of Ireland slumped 6.92pc to 54c, Allied Irish Banks tumbled 5.66pc to 50c and Irish Life & Permanent fell 2.86pc, closing at €1.36.

Away from the banks, the food giant Aryzta continued to deal with the fallout from the results it posted on Monday, falling 1.25pc to €33.19.

Energy

The stocks that posted gains could be counted on two hands, but were led by the oil and gas explorer Providence Resources, which soared 7.69pc to €2.10 in anticipation of its half-year results this morning and after the company reported a deal involving a licence off the Irish coast. Sandwich maker Greencore gained 1.31pc to €1.16 after releasing a strong trading statement.

Stocks fell across Europe after Irish and Portuguese bonds plunged, fuelling concern that the sovereign-debt crisis is worsening, while a report showed US consumer confidence declined to the lowest level in seven months.

National benchmark indices declined in 12 out of the 18 western European markets. France's CAC 40 slipped 0.1pc and Germany's DAX Index was little changed, while the UK's FTSE 100 Index rose 0.1pc. The composite Stoxx Europe 600 Index fell 0.2pc.

"We're seeing some renewed fears regarding peripheral European countries again," said Espen Furnes, a fund manager at Storebrand in Oslo. "Inves- tors are a bit more jumpy than usual, especially after the good returns we've seen so far in September."

In London, Man Group dropped 2.4pc after the hedge fund manager said it expects first-half profit to drop by more than 55pc.

Thomas Cook fell 7.3pc after Europe's second-biggest tour operator said higher costs in the UK will reduce operating profit by about £10m. Shares of larger rival TUI Travel slipped 1.7pc.

Irish Independent

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