European shares drop over US fears
Sterling climbs as traders weigh latest on Brexit manoeuvres Kingspan, CRH and Smurfit Kappa help drag down Iseq as Ryanair closes strongly
Worries about US bond markets signalling an impending recession, and a still rumbling trade war between the world’s top two economies, saw European shares sink further yesterday after a 3 per cent drop on Wall Street the previous day.
The pan-European Stoxx 600 ended down 1.2 per cent at its lowest level since November 23rd. The euro-zone stock index and Germany’s Dax also fell 1.2 per cent. Cyclical sectors such as construction and miners posted the biggest falls, down 2.2 and 1.8 per cent respectively, as investors dumped stocks highly sensitive to economic growth.
The Iseq followed its European counterparts down, falling 0.6 per cent at 5,665. The souring of sentiment in the US hit Kingspan the hardest. The insulation maker, which has a growing business in the US, fell nearly 5 per cent to €37.14. Building materials group CRH and packaging group Smurfit Kappa were also knocked back, closing down 2.3 per cent and 3.3 per cent respectively. Green Reit was marginally up, but rivals Iris Reit and Hibernia Reit traded down slightly as the UK market mulled the direction of the Brexit parliamentary debate.
It was a mixed bag for the State’s two main financials, with
Bank of Ireland trading up 1.7 per cent at €5.43 and AIB falling slightly to €3.69. Ryanair shares were strong, closing the session up 3.5 per cent at €11.80. The impact of Brexit on the aviation sector is far from clear with just four months to go to the UK’s planned exit in March.
Blue-chip London stocks were feeling the knock-on effects of a gloomy mood in the US, with the Wall Street hangover sending European markets into the red. The Ftse 100 index closed 100.92 points lower, a decline of 1.44 per cent, at 6,921.84.
On the London market, Shire was 140.5p higher at 4,690.5p after Japanese firm Takeda won shareholder approval for its £46 billion acquisition of the company. Ted Baker shares recovered slightly after two days of declines as the company deals with allegations of harassment levelled at its founder, Ray Kelvin. Shares were 47p, or 3.31 per cent, higher at 1,467p.
Fellow British brand Joules was turning its attention to Brexit by setting up an EU distribution hub and ordering products early as part of contingency plans for a potential hard Brexit. It came as the company unveiled a 21.2 per cent rise in retail sales to £79.9 million in the first half. The share price jumped 23p, or 11.11 per cent, to 230p. The biggest risers on the Ftse 100 were Persimmon, up 131.5p to
1,995.5p, Berkeley Group ,up 193p to 3,423 and Barratt Developments, up 23p to 473.8p. The biggest fallers on the Ftse 100 were Ashtead Group, down 103.5p to 1,672.5p, Melrose Industries, down 8.85p to 166.35p.
Chipmakers AMS, STMicroelectronics and Infineon fell 2.3 per cent to 6.1 per cent following a sharp drop in chip stocks on Wall Street overnight. German carmakers slightly outperformed the Dax as investors digested what seemed a relatively positive outcome from a meeting of auto executives at the White House.
US president Donald Trump pressed carmakers to increase investments in the United States, something the executives said they planned to do but wouldn’t be able to if the administration went ahead with threatened tariffs. White House economic adviser Larry Kudlow, said he did not think that car tariffs were imminent. Daimler and BMW and Volkswagen all fell less than 0.9 per cent.
Swedish pharma firm Elekta was a rare gainer, up 3.5 per cent after it won Food and Drug Administration clearance for its Unity radiation therapy, clearing it for commercial sales and clinical use in the United States.
US financial markets were closed yesterday for a national day of mourning to honour former president George Bush. US Federal Reserve chairman Jerome Powell’s testimony to Congress, scheduled for Wednesday, was also cancelled.
– Additional reporting by Bloomberg and Reuters