Sunday 17 December 2017

ISEQ finishes flat despite US rally

With US shares rising and European stocks on a losing streak, it was no surprise that the Dublin market struggled to find a sense of direction or momentum yesterday.

As a result, the ISEQ ended the day almost flat at 2,968 -- just about in positive territory but hardly a day of frenetic activity.

In the banking arena, the signals were mixed, with Bank of Ireland and Irish Life & Permanent (IL&P) rising, but AIB was dropping down once again.

Even with the ECB allowing Irish banks to reprice their tracker mortgages, the markets are not paying much attention to the major banks anymore, but Bank of Ireland is still seen as a speculative play for now even though volumes are still quite patchy.

Most of the volatility came in smaller stocks like Datalex rising by 12.2pc to 36 cent. Ormond Mining was up 9.09pc, at 12 cent.

The rising of rates by ECB president Jean-Claude Trichet is seen as a negative overall for Irish stocks, which draw much of their revenues from the debt-ravaged economy.

Despite this, the increase was very much priced into stocks around Europe, so the ISEQ shrugged off the news from Frankfurt.

However, Irish bond spreads have widened again this week, which has spillover effects for some Irish stocks. Higher oil prices are also a negative for most stocks, apart from those in the exploration area.


Internationally, the environment remains supportive for Irish stocks, with the latest US jobs report, the ADP Employer services report, boosting markets in the US.

The S&P 500 gained 1pc to 1,351.96 in New York, above its highest closing level since May 10. With so many Irish stocks dependent on the US market, this was of some help to sentiment on this side of the Atlantic.

But uncertainties about Greece's debt crisis persist, with a focus on Italian banks growing all the time. This may make things more difficult for Bank of Ireland to raise funding.

Italian banks UniCredit and Intesa Sanpaolo fell 5.5pc and 4.3pc respectively, as worries circulated about their capital positions and the deepening eurozone crisis.

On the aviation scene, Aer Lingus released traffic figures showing lower load factors and lower passenger numbers, as the airline blamed a threatened pilots strike during June.

The markets seemed to shrug off the 1.7pc drop in passenger numbers, as the shares finished flat on the day, although volumes were stronger than recent days.

It appears the stock will remain range-bound unless there is a change in ownership event or a strong recovery in the earnings profile of the company.

The latest escalating oil prices do not help the stock either. Ryanair remains the largest shareholder, although it is sitting on large paper losses on the stake.

Irish Independent

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