Business World

Tuesday 24 October 2017

Sovereign debt tops list of concerns

John Mulligan

John Mulligan

SOVEREIGN debt concerns were again to the fore yesterday as yields on 10-year Portuguese bonds remained over 7pc -- a threshold considered unsustainable and indicative of a possibility that the country could be the third after Greece and Ireland to seek a bailout.

The concerns, mixed into a recipe that included political uncertainty in Egypt, served to depress the euro against the dollar, while the price of Brent crude eased to $101 (€74) a barrel late yesterday amid expectations that President Hosni Mubarak was preparing to end his reign.

Inflation fears also hit stocks as investors fretted that borrowing costs would rise. Exchange operators themselves became a focus for attention after it emerged that Deutsche Borse and the NYSE Euronext were in talks to merge. That's a day after the London Stock Exchange and the Toronto Stock Exchange owner TMX agreed to merge. In Ireland, stocks followed the wider European trend, but the ISEQ Overall Index managed to end the session down slightly. It shed just 4.73 points, or 0.16pc, to finish at 2937.12. Earlier in the day it had fallen below 2,920.

Damage was inflicted on stocks including Bank of Ireland which shed almost 2.5pc or nearly 1 cent to close at 35.3c.

Offer

After markets closed the institution confirmed that an offer to exchange existing Canadian dollar securities would result in a €45m equity accretion for the bank. Irish Life & Permanent closed down 1.58pc, or 1.5c, at 93.4c.

Other fallers included Kenmare Resources, which declined over 9pc, or 4.5c, to 45c. The company, which owns a mine in Mozambique that produces the raw material used to make titanium, is reliant on the continued strength of industrial clients such as DuPont for its sales pipeline. Kerry Group put in a good performance for the day, adding 1.3pc, or 33c to close at €25.03, while packaging group Smurfit Kappa closed up just over 1pc at €8.69 a day after it fell from more than €9 after private equity shareholders sold 25 million shares in the group and it issued full-year results.

National benchmark indices retreated in 14 of the 18 western European markets. The FTSE-100 dropped 0.5pc, while France's CAC-40 gained 0.1pc and Germany's DAX advanced 0.3pc.

Guinness maker Diageo dropped 4.6pc to £11.95 (€14.14) after the world's biggest distiller reported first-half revenue and profit that missed analysts' estimates as growth in developing markets failed to offset declines in European countries including Ireland and Greece.

Danske Bank, which owns National Irish Bank, sank 11pc to 125.1 kroner after Denmark's largest lender said it plans a share sale of about 20 billion kroner (€2.68bn) and reported fourth-quarter profits that missed estimates.

Irish Independent

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