Sunday 22 April 2018

ISEQ retreats as instability grips global markets

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

European stocks deepened a monthly rout as disappointing earnings reports reignited investor concern about global growth prospects and oil prices resumed their downward trend.

In Dublin by late afternoon the Irish Stock Exchange was down by 50 points to 6,327.2.

The small number of leaders on the exchange was headed up by insurance firm FBD which saw its share price rise by 1.9pc to €6.47. Buildings materials group Kingspan rose by 1.4pc to €23.47 while Paddy Power jumped by 1pc after issuing a strong trading update.

Much better represented were the laggards. Bank of Ireland recorded the sharpest fall, dropping by just over 3.5pc to about 30 cent a share.

Property investment firm Green REIT tumbled by 3.3pc to €1.45 and despite announcing its new winter schedule for Dublin low-cost airline fell by 3.2pc to €13.83. It was a particularly bad day on the ISEQ for food groups as Glanbia, Total Produce, Aryzta and Fyffes all saw their shares decline.

In Europe the Stoxx Europe 600 Index slipped 0.3pc to 338.25 by mid-afternoon in London, after briefly erasing losses of as much as 1pc.

The index is heading for a monthly decline of 7.5pc, its biggest since August. A measure of volatility in the market has risen 26pc in January and reached its highest level since September last week.

"Nobody is really sure where we go from here, and nobody is brave enough to make the call," said Peter Dixon, Commerzbank AG's global equities economist in London. "Corporate-earnings season won't provide much of a support - markets may find a floor if the Fed is extremely dovish tonight. At least investors will have time to think and reassess valuations."

Tumbling oil prices have hamstrung global stocks as the two asset classes have become the most correlated since 2013.

An increase in oil prices on Tuesday fuelled a rebound in European commodity and energy producers, while better-than-expected corporate updates also boosted sentiment. Oil resumed declines today after US industry data showed crude stockpiles increased, adding to a global glut.

A measure of energy companies was among the worst performers on the Stoxx 600. Saipem SpA led the drop with a 4.8pc loss. Commodity producers also retreated, led by Anglo American and BHP Billiton.

Italian banks led a gauge of lenders to the biggest decline on the Stoxx 600 after the government and the European Commission agreed on a plan to help them offload bad debt.

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