Shares slump on poor growth outlook
IRISH shares slumped yesterday as poor economic data sent most stocks tumbling.
By the close the ISEQ Overall Index had lost 1.31pc, or 37.86 points, to close at 2,852.81.
It was a difficult day for the index from the start, as traders waited for the Central Bank forecast on economic growth. When that report came, the grim news sent dealers for the exits almost immediately.
The bank cut its forecast for economic growth this year by more than half as the Government steps up Budget cuts and consumers trim spending. Gross domestic product will probably rise by 1pc this year instead of the 2.4pc forecast in October, after falling an estimated 0.3pc in 2010.
That news sent all the banks tumbling, with Allied Irish Banks dropping 7.2pc to 23c and Bank of Ireland dropping 5pc to 30c. Irish Life & Permanent dipped 4.03pc to 86c.
The banks were not the only stocks to hit the buffers yesterday. Food stocks also suffered heavy selling with Kerry Group slumping 1.33pc to €23.67 and Aryzta losing 1.27pc to close at €31.75. Greencore fell another 2.57pc to €1.10 after the company said it was still assessing its options before deciding whether or not to make a new offer to merge with Northern Foods.
It was a bad day all round, with few stocks finishing the day in positive territory. Ryanair was an exception, however, with the low fare airline adding 0.75pc despite announcing a €10m quarterly loss.
Around Europe, most stocks dropped, extending two weeks of losses, as anti-government protests rocked Egypt for a seventh day, causing airline and travel company shares to fall. Brent crude passed $100 (€73) a barrel for the first time since 2008. National benchmark indexes fell in 11 of the 18 western European equity markets. Germany's DAX Index declined 0.4pc and the UK's FTSE 100 Index lost 0.3pc, while France's CAC 40 Index added 0.1pc. The Stoxx Europe 600 slipped 0.1pc.
"The current geopolitical tension in Egypt is serving as a handy excuse for investors to take some money off the table," said Cameron Peacock, a markets analyst at IG Markets.
"There have been many nervous market participants espousing the imminence, or need for, a pull-back, but who have been reluctant to sell out of positions for fear of missing out on further gains. It seems Egypt could be the catalyst for such a pullback."
Greene King rallied 5.3pc, among the largest gains on the Stoxx 600, as the brewer of Old Speckled Hen ale bought Cloverleaf Restaurants for £55.8m (€65.3m) to support its focus on food.
Oil and gas shares rallied after Exxon Mobil's profit topped analysts' estimates for the fourth consecutive quarterly increase in net income.