Markets dip with fresh fears on Greece

Wed, May 9, 2012, 01:00

HAVING HELD up relatively well on Monday, global equities fell yesterday as the market digested the impact of the weekend’s elections, with focus increasingly turning to the situation in Greece after the leader of Greece’s biggest political party failed to reach an agreement on a new government raising doubts about the future of the country’s bailout plans.

Meanwhile, the euro weakened for a seventh day, falling below €1.30 for the second consecutive day.

IRELAND

HAVING BEEN closed on Monday, the Irish market opened strongly, boosted by better-than-expected German industrial production figures. However, with the US opening there was a sharp sell-off, which continued for the rest of the day, with the Iseq finishing down 56 points.

While sentiment in Dublin was dominated by macro-concerns centred particularly around the euro zone, there was plenty of stock-specific news on what is set to be another busy reporting week.

CRH, which holds its agm in Dublin today and is due to release an interim management statement, finished down almost a half a per cent at €14.22.

Glanbia closed down 2 per cent at €5.63 ahead of its agm today with investors keen to hear any update on the food firm’s plans for the expansion of its processing facility as it prepares for the upturn in milk supplies post-2015 when milk quotas are removed.

Tullow Oil was up, following an “extremely positive” update regarding its Kenyan well, according to traders. It finished up 5 per cent in Dublin at €19.20.

Having spent most of the session in positive territory on the back of a positive trading update from peer company Recticel, insulation company Kingspan finished off 3 per cent at €7.30.

There was also interest in Ryanair ahead of Easyjet results tomorrow. The Irish airline finished the session down just over 1 per cent at €4.36.

LONDON

THE FTSE was also closed on Monday. Yesterday it closed down 1.8 per cent in line with markets generally, as anxieties increased regarding the economic ramifications of the Greek election.

Aviva’s share price rose as much as 5.8 per cent and closed up 0.2 per cent to 302.9 pence in London trading as Andrew Moss, the chief executive of the UK’s second largest insurer, resigned after presiding over an almost 60 per cent fall in the share price in the last five years.

HSBC shares rose as much as 3.4 per cent before erasing their gains as the FTSE 100 Index declined. The bank said first-quarter profit rose 26 per cent, beating analysts’ estimates, helped by increased income at its securities unit and a decline in US loan losses. Pretax profit, excluding losses on the revaluation of HSBC’s own debt, rose to $6.8 billion from $5.4 billion in the year-earlier period. HSBC closed 1.2 per cent lower at 548.6 pence, giving the bank a market value of about £100 billion.

CSM jumped 19 per cent after saying it will sell its US and European bakery-supply units.

Taylor Wimpey Plc led UK builders lower after a gauge of house prices fell to a six-month low.

EUROPE

EUROPEAN STOCKS dropped amid concerns about Greece. The Stoxx Europe 600 Index slid 1.7 per cent to 250.58 at the close in London as the cost of insuring against default on European sovereign and corporate debt advanced.

The volume of shares changing hands on the Stoxx 600 today was 14 per cent higher than the average of the last 30 days, according to data from Bloomberg.

National Bank of Greece led a sell-off in banks, falling 8.4 per cent to €1.42, extending yesterday’s 8.3 per cent slump. Alpha Bank, Greece’s second-largest lender, sank 14 per cent to €0.72. Spain’s Bankia SA dropped 4.8 per cent.

Royal KPN surged 17 per cent after America Movil SAB offered €2.6 billion for a larger stake in the business.

National benchmark indexes fell in every western-European market except Iceland and Portugal. France’s CAC 40 slid 2.8 per cent, the UK’s FTSE 100 fell 1.8 per cent and Germany’s DAX dropped 1.9 per cent. Greece’s ASE Index plunged 3.6 per cent to its lowest close since 1992.

US

US STOCKS ended lower yesterday after political developments in Greece fanned concerns about Europe’s fiscal health, but a late rally helped indexes cut losses to close well above lows.

McDonald’s Corp fell 2.1 per cent after April same-store sales missed expectations.

Fossil Inc tumbled 38 per cent. The fashion accessories maker slashed its full-year outlook on weakness in Europe.

Electronic Arts Inc dropped 4.3 per cent a day after forecasting revenue below estimates.

On the New York Stock Exchange, decliners outnumbered advancers by a ratio of about 3 to 2. On the Nasdaq, about 13 stocks fell for every 11 that rose.