Shares fall as coalition crumbles
IRISH shares fell yesterday, snapping a three-day winning streak, after political instability threatened the implementation of December's Budget and accompanying austerity measures.
By the close yesterday, the ISEQ Overall Index stood at 2756.73, down 1.49pc, or 41.74 points, on the day.
The index surged into positive territory in early trading, passing the 2800 barrier, but fell back after the Green Party called for a general election in the new year.
The banks all took a battering with Irish Life & Permanent tumbling 27pc to 84c and Bank of Ireland slumping 19.13pc to 39c. Allied Irish Banks fared little better, losing 6.21pc to end the day at 41c.
Dolmen Securities head of research, Oliver Gilvarry, said BoI and AIB may need up to €5bn immediately as part of the bailout package while Goldman Sachs' chief economist, Erik Nielsen, estimated the overall bailout package may be up to €95bn. Ratings agency Moody's warned a "multi-notch" downgrade of Irish debt was likely.
Away from the financials, the software company Norkom lost 11.82pc to 97c amid ongoing concerns about the company which had its rating cut by Davy Stockbrokers on Friday.
It was a day when few stocks finished higher than their opening. Aryzta closed up 1.87pc at €31.11 after its subsidiary Origin Enterprises reported positive trading in the first quarter of its fiscal year. Oil and gas explorer Providence Resources continued its good run of late, adding 0.87pc to €3.47.
The Irish question dominated markets worldwide, with markets across Europe apparently underwhelmed with the initial details of the bailout package.
National benchmark indexes declined in all 18 western European markets, with the UK's FTSE losing 0.9pc, Germany's DAX slipping 0.3pc and the French CAC 40 falling 1pc. The composite Stoxx 600 fell 0.6pc.
"The structure is in place at the moment to put countries on life support, but the missing link still remains the bigger issue of what do you do after that," said Cambiz Alikhani, portfolio manager at Iveagh Wealth Fund in London.
"Until that question is answered, we are still in this rolling bailout situation which has been ongoing since 2008."
In Frankfurt, Deutsche Bank, Germany's largest lender, and Commerzbank, the country's second biggest, fell 1.4pc and 1.9pc, respectively. A gauge of European banking shares posted the biggest decline among 19 industry groups in the Stoxx Europe 600 Index, retreating 2pc.
BMW, the world's biggest maker of luxury cars, rose 1.8pc while Volkswagen, Europe's largest car-maker by sales, advanced 2.6pc. Porsche soared 4.9pc.