Saturday 25 November 2017

Wary investors sell markets as growth tapers off

Peter Flanagan

Peter Flanagan

SHARES around the world plunged yesterday, as construction company CRH reported worse-than-expected results, and poor US housing data weighed the markets.

In London, the FTSE 100 lost 1.5pc while the German DAX and French CAC fell 1.3 and 1.7pc respectively.

The composite Stoxx 600 index fell 1.7pc while, in New York, the Dow Jones Industrial Average had dropped more than 1pc by late afternoon after sales of existing houses plunged by a record 27pc in July.

"With the recent weak economic data in the US and more visibility in Europe that we've passed the economic growth peak, equity investors are more cautious," said Tammo Greetfeld, senior equity strategist at UniCredit in Munich.

"The newsflow, like CRH for example, fits into that picture," he added.

Here, the ISEQ Overall Index lost 5.78pc, or 160.75 points, to close at 2,620.12 -- its lowest point in more than a year.

The day's loss was the ISEQ's worst single-day performance, since it fell by more than 8pc, at the height of the financial crisis, in November 2008.


CRH, which makes up more than a fifth of the index, fell 16.58pc -- its worst one-day loss since 1988 -- to close at €11.70. The construction giant blamed US sales which were lower than predicted.

"This is a disappointing outlook, particularly coming so close to the July statement. Whatever the reason for it, the scale of the downgrade is very significant," said Barry Dixon of Davy stockbrokers.

Predictably, a wave of selling across the market followed CRH's results. Aer Lingus slipped 4.3pc to 89c after posting a pre-tax loss of €20.8m for the first half of the year while the banks all fell, except for Irish Life & Permanent.

Bank of Ireland fell 3.98pc to 75c and Allied Irish Banks slipped 3.27pc to 80c.

Any optimism that followed building materials group Kingspan's results on Monday was wiped out, the stock dropping 6.16pc to €5.04.

Few shares ended the day in positive territory. Oil and gas company Petroneft gained 0.83pc after announcing that oil production had started at a facility in Russia and Irish Life & Permanent jumped 0.86pc after it raised funds without the state guarantee.

"The big shock is the US housing numbers," said Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland.

"In some ways we probably should have expected that because the housing market has given a number of signs of weakness up to this point."

Irish Independent

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