Friday 15 December 2017

Hopes that stress tests will reassure markets lift ISEQ

John Mulligan

The ISEQ soared yesterday as shares in Bank of Ireland in particular surged on the back of the results of stress tests issued on Thursday.

It is hoped the results -- which indicated another €24bn is needed by the domestic financial institutions -- will help the country to draw a final line under the banking crisis that has plagued it since 2008. It was the first day in dealing in the bank stocks after trading was suspended for Thursday.

Other shares rose, too, as wider European indices posted strong gains on expectations that US jobs data due later in the day would demonstrate a strong recovery in the country's labour market.

In the event, those US figures showed that more jobs than expected were added to the economy in March, reducing the unemployment rate to 8.8pc from 8.9pc in February.

The ISEQ rallied over 2.2pc, or 68.87 points, during the day, to close at 2939.58.

Bank of Ireland, which has to raise €4.2bn by the middle of June, was catapulted 41.3pc, or 9.1 cent, by the end of the session to close at 31.1c.

Even shares in AIB, which will require €13.3bn and is already effectively owned by the State, climbed 11.1pc, or 2.1c, to head for the weekend at 21c.

Shares in Irish Life & Permanent, which plunged 45pc on Wednesday when it became apparent the bank would fall into state ownership, continued their downward trajectory yesterday, shedding 58.7pc, or 23.8c, by the close of business to finish at 16.7c, valuing the company at just €46.2m.

A European Commission spokesperson said the stress tests "should convince and should reassure" markets.

Ratings agency Standard & Poor's downgraded Ireland's credit rating, but said the sovereign rating is now on a stable outlook given the credibility of the bank stress tests.

Other gainers included Aer Lingus, up 3.6pc to 74.2 cent, even as oil prices continue to rise on the back of the better US jobs data.

"The better-than-expected employment numbers are another supportive factor for the [oil] market," said Tom Bentz, a broker with BNP Paribas Commodity Futures.

"There's nothing to stop this uptrend -- $110 oil is on its way."

National indices rose in all 18 western European markets except Luxembourg and Greece. The UK's FTSE-100 added 1.7pc, while France's CAC 40 gained 1.6pc. Germany's DAX rose 2pc.

Irish Independent

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