Business World

Wednesday 13 December 2017

ISEQ slides on European worries

Peter Flanagan

Peter Flanagan

IRISH shares tumbled yesterday, as traders here got their first chance to take action after the electorates in France and Greece rejected austerity at the weekend.

By the end of the day in Dublin, the ISEQ Overall Index had lost 1.79pc, or 56.52 points, to end the session at 3,106.44.

The market slid from the opening, as trading here tracked losses registered around the globe on Monday. The closing price was the lowest point of the day for most stocks, with the index now down more than 5pc since May 2.

Commodities-based companies led the index lower, as concern about the state of the European debt crisis reared its head once again.

New French President Francois Hollande's calls for a renegotiation of the fiscal compact on budgetary discipline and Greek elections that saw a surge of support for parties opposed to the cuts mandated by the union prompted the EU to hold an "extraordinary" meeting on growth measures later this month.

Petroneft dropped 9.09pc to 10c, while Turkmenistan-focused Dragon Oil dropped 4.27pc to €6.70. Oil fell nearly 1.6pc to $111 on fears demand would slow down as part of a wider slowdown in Europe.

Takeover

Kenmare Resources ended the session 7.76pc lower at 54c. The Mozambique-focused ilmenite miner has been the subject of near constant takeover speculation in recent weeks, with behemoths Xstrata and Rio Tinto regularly mentioned as possible suitors.

Elsewhere, European stocks dropped after the leader of Greece's biggest political party failed to reach an agreement on a new government.

National benchmark indices fell in every western-European market except Iceland and Portugal. France's CAC 40 slid 2.8pc, the UK's FTSE 100 fell 1.8pc and Germany's DAX dropped 1.9pc. Greece's ASE Index plunged 3.6pc to its lowest close since 1992. The composite Stoxx Europe 600 Index slid 1.7pc.

"European political risk remains centre stage for financial markets," wrote Adrian Cattley, a strategist at Citigroup, in a report to clients. Greece's election result "suggests no quick path to a new stable government and could raise probability of contagion risks."

The euro weakened for a seventh day as Antonis Samaras, the leader of the New Democracy party in Greece, said he failed to reach an agreement to form a government. Alexis Tsipras, the head of Syriza, the second-biggest party, will now attempt to form a coalition government of left-wing parties.

In London, Xstrata fell 3.8pc and Glencore retreated 4.5pc. Randgold Resources declined 6.8pc as gold tumbled below $1,600 an ounce for the first time since January.

Irish Independent

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