Irish shares slump at twice the pace of Europe

Irish shares were trampled on Monday as investors continued to baulk at the impact of Brexit on its closest trading partner -- and analysts downgraded stocks from Ryanair to C&C.

The Iseq slid by 9.9 per cent to 5.296.74 to hit a fresh year-and-a-half low, with the decline outpacing Friday’s 7.7 per cent sell-off. Irish shares fared much worse than the FTSE in London, which dropped 2.6 per cent, and slid at more than twice the pace of the the Stoxx 600, a broad European benchmark, lost 4.1 per cent.

Sterling falls

Sterling added to Friday’s record 8.1 per cent drop with another 3.6 per cent slide against the US dollar, to $1.3209 despite an attempt by UK Chanceller of the Exchequer George Osborne to ease concerns by saying he was working closely with the Bank of England and officials in other leading economies.

"It's going to continue to be a fairly choppy ride," said Michael Hewson, a market analyst at CMC Markets in London. "Banking stocks will continue to struggle. There is still a wider concern about the stability of the European banking sector. The ECB will reiterate it remains prepared to act given any circumstances, as will central banks around the world."

Bank shares suspended

UK lenders Barclays and Royal Bank of Scotland saw their shares temporarily suspended earlier in the nervous session as they each tanked by more than 8 per cent. Indeed, European bank shares had their worst two-day fall on record and world stocks were on track for worst two-day fall since the aftermath of the Lehman Bros collapse in late 2008.

In Dublin, Bank of Irelandplummeted by 21 per cent to 17 cents, with influential broker Deutsche Bank, for one, highlighting the lender's exposure to the UK market to clients. More than 40 per cent of the bank's loan book is in the UK.

Ryanair dived by 15.2 per cent as sector followers reeled at a profit warning this morning from rival Easyjet, hot on the heels of a simliar alert by Aer Lingus's parent IAG on Friday, and as analysts at HSBC and Evercore ISI downgraded their views of the Irish carrier.

Market sentiment

Market sentiment in Dublin was at odds with comments from Minister for Finance Michael Noonan that there was no sense of panic in Ireland over Brexit.

The weak session across Europe followed on from declines across Asian bourses on Monday.

"Political developments over the weekend have merely added to the uncertainty," said Conall Mac Coille, an economist with Davy. "First, European politicians argued that exit negotiations must begin immediately rather than waiting for the several months delay envisaged by Prime Minister David Cameron to steady the ship. Also, Scottish first minister Nicola Sturgeon raised the possibility of a fresh independence vote."

- (Additional reporting: Bloomberg, Reuters)