Monday 18 December 2017

ISEQ fall reflects fears of a change in US risk policy

Thomas Molloy

THE ISEQ and other benchmark indices in Europe fell yesterday, dragged lower by financial services stocks on concerns the Obama administration will rein in risk-taking at banks.

National benchmark indexes slid in all 18 western European markets except Luxembourg.

The ISEQ closed down 42.66 points, or 1.4pc, ending at 3044.87. The UK's FTSE 100 sank 1.6pc, France's CAC 40 fell 1.7pc and Germany's DAX dropped 1.8pc.

In Dublin, IL&P fell 5.7pc, AIB slid 5.2pc and Bank of Ireland closed down 4.6pc amid fears over the banking sector.

Royal Bank of Scotland said yesterday that it estimated the two big banks needed to raise a combined €10.3bn, or three-and-a-half times' their market capitalisations, to shore up their balance sheets.

It was also a bad day for oil stocks. Tullow Oil slid 5.3pc after the Ugandan government made negative noises about the explorer's efforts to buy out a partner in east Africa.

The stock had earlier hit a record high after the company made positive sounds about a find in Ghana.

Dragon Oil and Petroceltic International also fell by 5.2pc and 4.1pc respectively.


Elsewhere in Europe, TomTom, the Dutch maker of portable navigation devices, slumped 11pc after Nokia announced plans to introduce a free navigation service.

BHP Billiton and Rio Tinto led mining shares lower as more Americans filed claims for unemployment benefits last week and metals declined.

"The real economy is gradually recovering, but since March, asset prices have gone through the roof," Nouriel Roubini, the New York University professor who in 2006 foresaw the financial crisis, warned yesterday.

"If I'm correct, by the second half of the year, there's going to be a slowdown of growth in US, Europe and Japan.

"That could be the beginning of a market correction because the macroeconomic news is going to surprise on the downside," he added.

Meanwhile, British pub giant Enterprise Inns jumped 20pc, after it announced results and said it sold 103 pubs for £32m (€37m).

And United Utilities Group, Britain's biggest publicly traded water company, surged 4.7pc after chief executive Philip Green said "we're confident we can at least meet regulatory targets".

Irish Independent

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