Wednesday 21 March 2018

Irish shares begin to claw back some post-Brexit losses, mirroring trends in Europe and the US

Blackrock chief executive Larry Fink
Blackrock chief executive Larry Fink
Gavin McLoughlin

Gavin McLoughlin

The ISEQ index of Irish shares clawed back some of its post-Brexit referendum losses this week, closing up 3.77pc on Friday July 8's close.

The index closed at 5,790.94, up from 5,580.42, but is nearly 1,000 points off the yearly high seen in January.

Best performers in the week included Bank of Ireland - which took a pounding after the referendum and has a significant level of exposure to the UK - which rose nearly 10pc.

Permanent TSB, which wants to sell a book of UK mortgages, rose nearly 12.5pc.

And Kingspan, another UK-exposed company that had taken heavy losses, rose nearly 8pc.

All three stocks remain below pre-vote levels, however.

Statistics for the second quarter published by the Irish Stock Exchange showed the index lost 10.6pc in the period, which the ISE attributed to the Brexit vote and global market uncertainty more generally.

The index lost nearly 1pc on Friday in the aftermath of the Nice terrorist attack, which hurt travel stocks across Europe. But the rally in Ireland mirrored European and US trends in a week where the S&P 500 tipped a record high.

At the time of going to press, gold was poised for its first weekly drop since May as investors turned to risk assets such as stocks, cutting demand for bullion as a haven.

Money poured into global equities as speculation grew that policymakers would do more to limit the fallout from the Brexit vote. Retail sales in the US topped forecasts, in a broad advance that showed consumers delivered.

"The economy looks better than maybe people thought and the consumer is doing its thing: that suggests that fabled big slowdown didn't actually happen," said Bart Melek, head of commodity strategy at TD Securities in Toronto.

"This should precipitate a bit of downside pressure on gold."

US equities headed for a third week of gains, but money managers - including Blackrock chief executive Larry Fink - said the rally may not be justified and won't last unless earnings pick up.

"Markets have gone beyond their expected altitude," said Peter Dixon, global equities economist at Commerzbank in London. "If we do get some decent earnings from banks, that might drive the markets a bit higher, but I suspect it could be a good trigger for people to think about taking some profit."

In Europe, stocks erased most of their intraday losses at the close of trading on Friday despite the Nice attack, even as the news dragged travel shares lower.

The Stoxx Europe 600 Index closed less than 0.2pc lower, paring an earlier drop of as much as 0.7pc.

Travel and leisure shares posted the biggest slide, with EasyJet, Thomas Cook Group and hotel operator Accor down at least 2.7pc.

Europe's benchmark gauge posted a weekly gain of 3.2pc, rebounding from a June 27 low amid expectation of action from policymakers and some earnings reports that beat estimates. The gains haven't been enough to overcome losses from the Brexit vote, however.

(Additional reporting Bloomberg)

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