Monday 18 December 2017

Banking concerns drag ISEQ lower

Thomas Molloy

IRISH shares fell, led lower by Allied Irish Bank and Bank of Ireland on renewed concern that they will soon be controlled by the State.

Shares elsewhere also declined as German businesses confidence unexpectedly dropped and US consumer sentiment declined more than forecast to a 10-month low.

The benchmark ISEQ slid 18.04 points, or 0.6pc, to 2955.94. National benchmark indices declined in all 18 western European markets except Luxembourg. Britain's FTSE 100 dropped 0.7pc and France's CAC 40 retreated 1.3pc. Germany's DAX slid 1.5pc.

Allied Irish Banks fell 5.8pc to €1.02 while Bank of Ireland fell 5.7pc to €1.12 as the markets continue to digest the implications of Bank of Ireland's forced sale of 16pc of the bank to the government in lieu of the a dividend. Allied Irish now has a market value of little more than €900m.

Heavyweight companies reporting results yesterday did rather better with Kerry Group adding 2.5pc to close the session at €23.32 and Dragon Oil rising 1.6pc to €5.30.

Stocks elsewhere in Europe retreated for a second day, with the Dow Jones Stoxx 600 Index dropping 1.2pc to 246.71, the biggest decline in more than two weeks.

Commerzbank sank 6.5pc to €5.64 as Germany's second-biggest bank posted a wider-than-estimated loss.


"Nobody is entirely sure if it's a real recovery or not," said Gregor Smith, a fund manager at Daiwa Asset Management in London. "The jury is still out as to what will happen later this year. Will stimulus be removed this year and, if so, what will it mean for the underlying economy?"

Merck plummeted 10pc to €58 after the German maker of chemicals and drugs said this year's earnings will increase less than analysts estimated and proposed a 33pc dividend reduction.

Heineken rose 3.1pc to €36.12 after profit rose more than expected. Carlsberg surged 8pc after reporting an 18pc rise in annual profit.

Wolseley jumped 12pc to £16.26, the biggest gain in the Stoxx 600, after the world's largest supplier of heating and plumbing products forecast profit will exceed expectations.

Energy stocks were also a drag on the blue chip index as crude fell back to $79 a barrel. BG Group, BP, Royal Dutch Shell, Cairn Energy and Tullow Oil lost between 1pc and 3.1pc.

US blue chips were 0.6pc lower by Dublin's close after US consumer confidence fell in February to its lowest level in 10 months. Technology shares led declines with chip maker Intel down 2.6pc to $20.33 and the S&P information technology sector down 1.5pc. Concerns about the economy also hurt oil and other commodity prices, and shares in the energy and materials sectors were among the hardest hit.

Irish Independent

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