Markets rebound on better bank news

It was a torrid week on the markets but global indices staged a rebound yesterday, as they took reassurance about the banking sector and prospects for a co-ordinated oil production cut. All of this was sufficient to lift the Irish market by close to 1 per cent on the day.

DUBLIN

The Iseq index finished at 5,793.41, down 4.6 per cent on the week. “Ireland sits up there like a beacon of growth, but, like everything else, if the market is going down, the market goes down,” said a trader at the close.

The trader cited a degree of market chatter reflecting a “early concerns” over the possibility of a British exit from the EU and “Spanish-type concerns” over talk of a hung Dáil after the election.

Bank of Ireland gained 2.3 per cent on the day to reach 26.7 cent but the stock was down from 28.3 cent a week previously.

“Bank of Ireland has done absolutely nothing wrong, but European banks were decimated over the week. Bank of Ireland was [trading] 1.1 times book [value] at the start of the week, and it’s moved back with the sector,” the trader said.

Smurfit Kappa, which reported solid results during the week, finished 4.69 per cent higher on the day at €21.20.

Citing a 12 per cent swing in Kingspan shares this week, the trader said "savage" volatility was the only theme. Kingspan finished out at €21.17, up 0.83 per cent on the day.

LONDON

Britain’s top share index ended higher, recording its best one- day percentage gain in more than five months, as banking and commodity-related stocks rebounded from a slump in the previous session.

Rolls-Royce jumped more than 14 per cent after a well-received update, helping the FTSE 100 index to end 3.1 per cent higher at 5,707.60 points, after falling to its lowest point since late 2012 on Thursday. The index, however, finished 2.4 per cent lower this week. The oil and gas index gained 5.9 per cent after prices of major industrial metals rose and oil prices rose 10 per cent on prospects for a co-ordinated production cut, sparked by comments from the energy minister of the United Arab Emirates.

Banks were also among the top gainers, led by an 11 per cent rise in Standard Chartered and a 6.3 per cent gain in Barclays.

EUROPE

European shares rebounded as Deutsche Bank and Commerzbank rallied, helping stock markets stage a partial recovery from stinging losses earlier in the week.

The pan-European FTSEurofirst 300 index ended 3 per cent higher, rising back up off its lowest level in more than two years. Fears about how well European banks can cope with slow growth and low interest rates had pushed European banking shares to multi-year lows.

But Deutsche Bank surged 11.8 per cent after saying it would buy back more than $5 billion in senior debt, easing concerns about its bonds. Its rival Commerzbank also reported a return to profit in the fourth quarter, and its shares jumped 18 per cent.

The STOXX 600 Europe Banks index rose 5.6 per cent. Germany’s DAX advanced 2.5 per cent, but it remains nearly 30 per cent below a record high reached in April 2015.

NEW YORK

Wall Street rallied, led by a rebound in beaten-down financial and energy stocks after five straight days of a gruelling selloff on fears over the health of the global economy and the banking sector.

Nine of the 10 major S&P sectors were higher, led by a 3.7 per cent rise in the financial sector. Energy and materials stocks, both of which have been hit by slumping commodities prices, were up about 2.5 per cent.

Bank stocks, hit worst due to concerns about the impact of negative interest rates and energy-backed loan defaults, were the top gainers, led by JPMorgan's near 8 per cent gain. The US market is closed on Monday for President's day. – (Additional reporting: Reuters)