Saturday 24 February 2018

Bank woes push ISEQ into the red

John Mulligan

John Mulligan

THE ISEQ was one of few European indices that ended yesterday's trading session in the red, as continuing concern regarding the health of the banking sector and the wider economy weighed on investors. Retail sales in December were lower than expected, according to data yesterday.

Eyes were largely on the financial sector as Central Bank Governor Patrick Honohan confirmed that the State would take unspecified additional stakes in the country's two main banks -- Bank of Ireland and Allied Irish Banks (AIB) -- in a final push to shore up their balance sheets after loans have been transferred to the National Asset Management Agency (NAMA). Additionally, Bank of Scotland's announcement that it would close its retail arm here did little to instill confidence.

The ISEQ Overall Index dipped 0.8pc, or more than 24 points, to end the session at 2,884.28. But that seemingly benign fall masked a near 3.5pc decline in the ISEQ Financial index. The ISEQ Overall Index is now down about 3pc since the beginning of the year.

Financial stocks had initially remained relatively resilient during the day, but succumbed to sellers.

AIB fared the worst among Irish financial stocks, falling 4.4pc, or 5 cent to finish at €1.07. Irish Life & Permanent shed 4.2pc, or nearly 13c to close at €2.90. Bank of Ireland was off almost 2.5pc, or 3c at €1.19.

The sea of red on the exchange extended to other companies, including pharmaceutical group Elan, which declined 2.1pc to €5.14, but regained some ground after hours.

Packaging giant Smurfit Kappa, which releases fourth-quarter and full-year results today, rose nearly 1.6pc, or 10c, to exit at €6.50.

Ryanair, which yesterday announced the location of its fortieth base, was flat at €3.42.

The ISEQ's performance was largely against the grain yesterday, as most other European indices rose after investors speculated that the European Union would assist Greece in tackling its budget deficit and Swatch Group posted better- than-estimated earnings, overshadowing a decline by Swiss banking giant UBS.

National benchmark indices advanced in 14 of the 18 western European markets. The UK's FTSE-100 added 0.4pc to close at 5,111.84, helped by banks and mining shares, while Germany's DAX and France's CAC 40 each rose 0.2pc. Greece's ASE Index surged 5pc, the largest gain since early December.

National Bank of Greece, the nation's biggest lender, climbed 7pc to €13.80, snapping a four-day retreat.

EFG Eurobank Ergasias, the second-biggest, rallied 11pc to €5.60 and Alpha Bank soared 15pc to €6.85.

EU leaders will discuss Greece's plans to reduce the region's biggest deficit when they meet tomorrow. (Additional reporting, Bloomberg)

Irish Independent

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