Irish stocks slip as banking concerns linger

A view of the Park Avenue location of the First Republic Bank, in New York City, US, March 10, 2023. Photo: REUTERS/David Delgado.

Caoimhe Gordon and Elizabeth Howcroft

March 17 2023 10:50 AM

European stock indexes edged lower on Friday after an early recovery ran out of steam, while Wall Street futures were mixed as investor sentiment remained fragile after a week of turbulence.

Irish shares fell after modest rises in early trading.

Bank of Ireland shares dipped by 3pc, while AIB Group was down by 3.21pc.

Permanent TSB was down by almost 4pc.

Ryanair shares also declined by 2.61pc, while Dalata Hotel Group shares dropped by 3.38pc on Friday afternoon.

This comes after a week of market turmoil following the collapse of Silicon Valley Bank, as well as fears over Swiss bank Credit Suisse earlier this week.

Shares were up slightly on Friday morning after Californian lender First Republic secured a $30bn lifeline from major US banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist.

The tumultuous week saw bond yields drop as investors lowered their expectations for future rate rises.

Risk appetite showed signs of recovery on Thursday, helped by Credit Suisse saying it would borrow up to 50 billion Swiss francs ($54bn) from the Swiss National Bank and, later in the day, a group of major banks injecting $30bn in deposits into First Republic.

Still, analysts say the worry about a possible banking crisis is far from over.

Credit Suisse's chief executive said on Friday the bank was working hard to stem customers outflows, although this could take time. Credit Suisse shares resumed their decline.

European Central Bank supervisors do not see contagion for euro zone banks from the market turmoil, a source familiar with the content of an ad hoc supervisory board meeting earlier this week told Reuters.

The U.S. 2-year Treasury yield, which is the most sensitive to shifts in interest rate expectations, was up 1 basis point on the day at 4.1426pc - still closer to Wednesday's six-month low of 3.72pc than the peak of 5.084pc it hit the previous week, which had been its highest since 2007.

The European Central Bank raised rates by 50 bps on Thursday, sticking to its pledge to fight inflation even as some investors called for a pause in the rate-hiking cycle until the banking turmoil eases.