Wednesday 22 November 2017

Calm before stress-test storm for Irish market

Bank of Ireland fell 10.93pc to 22c. Photo: Getty Images
Bank of Ireland fell 10.93pc to 22c. Photo: Getty Images
Peter Flanagan

Peter Flanagan

IT was a case of "the calm before the storm" in the Dublin market yesterday as traders awaited for the results of the stress tests later today.

The suspension of trading in Irish Life and Permanent a day after the lender lost nearly half of its value amid reports it may be effectively nationalised ensured the day's trading carried on as normal while dealers tried to ignore the elephant in the room.

By the close of trading the ISEQ Overall Index stood at 2,886.64 -- a gain of 0.35pc or 9.98 points.

With shares in IL&P suspended for 48 hours and Allied Irish Bank already 90pc state owned, attention turned to Bank of Ireland which promptly fell 10.93pc to 22c. AIB closed flat.

"[IL&P and Bank of Ireland] have clearly got most to lose," said Oliver Gilvarry, head of research at Dolmen Securities. "It's difficult to see how either will end up less than 50pc owned by taxpayers."

Away from the financials it was a quiet day, although the food sector had a particularly strong session.

Irish-led Aryzta added 3.07pc to €35.30 while Kerry Group jumped 1.22pc to €26.64. Glanbia rose 0.58pc to €4.35 and sandwich maker Greencore gained 0.42pc.

Packaging firm Smurfit Kappa soared 5.44pc to €8.91 after Morgan Stanley put an "overweight" rating on the stock and listed it as a top pick in the sector.

Some upside

National benchmark indexes rose in all of the 18 western European markets, except Greece and Spain.

The UK's FTSE 100 gained 0.3pc and France's CAC 40 advanced 0.9pc. The Stoxx Europe 600 climbed 0.7pc.

"The situations in Japan and the Middle East aren't going to derail the global recovery or markets," said Larry Kantor, head of research at Barclays Capital. "Valuations are attractive, and growth, at least in the northern countries, is solid. There's still some upside," he added.

BHP Billiton, the world's largest mining company, advanced 1.4pc. Vedanta Resources, the largest copper producer in India, rose 3.4pc as Morgan Stanley said the shares have the potential to gain as much as 64pc.

Bellway climbed 4.4pc, the first advance in four days. The second-worst performing UK homebuilder in the past 12 months said first-half profits rose after the company sold more homes at higher prices.

Tate & Lyle, the maker of the low-calorie sweetener Splenda, advanced 1.9pc. The stock was raised to "buy" at Investec.

Thomas Cook, Europe's second-biggest tour operator, surged 5.9pc after Royal Bank of Scotland reiterated its "buy" recommendation.

Dixons retreated 18pc, the biggest drop since 2008 after the UK's largest consumer-electronics retailer said full-year earnings will miss most analysts' estimates as sales decline because of weakening consumer confidence.

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