Thursday 18 January 2018

ISEQ hit by Greek and Spanish woes

Traders work on the floor of the New York Stock Exchange on Thursday. Photo: Reuters
Traders work on the floor of the New York Stock Exchange on Thursday. Photo: Reuters
Peter Flanagan

Peter Flanagan

IRISH shares fell yesterday, as the turmoil in Spain and Greece began to engulf the wider eurozone.

By the close of trading in Dublin the ISEQ Overall Index had slid 0.6pc, or 16.75 points, to 3,006.43.

The market slumped early and stayed down for the rest of the session before an afternoon rally made sure the index closed above 3,000.

Moody's cut Spain's rating by three steps to Baa3 from A3 late on Wednesday, citing the nation's increased debt burden, weakening economy and limited access to capital markets. Moody's also lowered Cyprus's bond rating to Ba3 from Ba1, attributing the downgrade to the increased likelihood of Greece leaving the euro area.

The country's government may have to increase support to Cypriot banks as a consequence.

The yield on Spain's 10-year debt rallied as high as 7pc, a eurozone record. Italy sold €4.5bn of debt, matching its maximum target, at an auction. The yield on its three-year bond, however, jumped to 5.3pc. That compared with a yield of 3.91pc when it last sold the securities on May 14.

Unsurprisingly, the macro environment hit sentiment in Dublin. CRH closed down 1.1pc at €13.65, while the food sector had a mixed day with Kerry Group losing 1.45pc to €34.93. Total Produce dropped 1.22pc to 41c.

Sell-off

Origin Enterprises endured a heavy sell-off, plunging 7.89pc to €3.15 on high volumes.

On the other side of the market, Independent News & Media, publisher of this newspaper, recovered some of Wednesday's losses to gain 4.48pc and close at 21c.

In percentage terms, the big winner was oil and gas explorer Petroceltic, which surged 21.4pc to 9c. The move came after a single investor bought one million shares. Away from Ireland, it was a mixed day for European trading.

The benchmark Stoxx Europe 600 Index dropped 0.3pc but national benchmark indices gained in 10 of the 18 western-European markets. The UK's FTSE 100 dropped 0.3pc and Germany's DAX slipped 0.2pc. France's benchmark CAC 40 added 0.1pc. Greece's ASE Index rallied 10pc for its biggest climb since August.

"The big news obviously is (Spanish yields) ticking up, so the question is how long can they sustain this before having to go back for more funds," said Chris Beauchamp, a market analyst at IG Index in London.

"It's the rising yields and then you factor in the Italian yields and then obviously you have the Greek elections so you've got a perfect storm brewing."

In London, BSkyB sank 3.5pc, the biggest plunge since November, after its pay-TV Sky channel increased its spending to retain the rights to show most Premier League games.

Irish Independent

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