Thursday 14 December 2017

Rise in EU jobless and index drops spook investors

John Mulligan

John Mulligan

Markets got the jitters yesterday after bursting with confidence earlier in the week when indices reached highs not seen in years.

The declines came as Eurostat said the European Union's unemployment rate rose to 11.9pc in January from a revised 11.8pc recorded in December. It is now at the highest level since the index began to be collated in 1995.

That, coupled with other poor data, spooked investors.

The eurozone manufacturing purchasing managers' index did not budge last month from January's 47.9 reading, with any reading below 50 signifying contraction. Germany and Ireland were the only two eurozone members to record a rise.

In China, factory orders slowed to their lowest levels in five months, while in the UK the manufacturing sector unexpectedly shrank last month, raising fears that it is headed for yet another recession.

In Ireland, the ISEQ Overall Index sank around lunchtime but managed to regain lost ground as it headed into the weekend. But it still barely closed in positive territory, adding just 5.43 points to close at 3,762.20. It was one of the few European indices to close up.

Main movers yesterday included Ryanair, which gained 1.6pc, or nine cent, to finish at €5.75. That gain came even as the UK's Competition Commission signalled that it has resumed a probe into the airline's near 30pc holding in Aer Lingus, amid concerns that it may be unduly impacting its smaller rival and adversely impacting the market.

The commission will deliver a preliminary verdict in May and could force Ryanair to sell its stake. Shares in Aer Lingus were unchanged at €1.24.

Glanbia, Kerry and Aryzta all hit record highs.

Shares in builders' merchanting firm Grafton Group advanced 2.6pc, or 12 cent, to €4.90. UK peer Taylor Wimpey reported full-year operating profit that was ahead of expectations and a halving of its net debt. It was also more positive on its outlook.

Smurfit Kappa just about edged into positive territory at the end of the session, hitting €11.95. Bank of America Merrill Lynch said in a note that it was raising its price target for the stock to €12.50 on the back of price increases pushed through on container board.

Shares in exploration firm Providence Resources were off 1.3pc, or 10 cent, at €7.30, while in London, shares in United Drug closed down 1.8p at 284.5p.

National benchmark indices dropped in 11 of the 18 western European markets. The UK's FTSE 100 added 0.3pc, France's CAC 40 lost 0.6pc and Germany's DAX retreated 0.4pc.

Irish Independent

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