Markets retreat on fresh Espirito fears

Trade mixed in Dublin with Ryanair down, despite its new app, and Paddy Power up

Espirito Santo plunged 11 per cent to 39.6 cents, its lowest price since June 2012. Photograph: Mario Proenca/Bloomberg

Espirito Santo plunged 11 per cent to 39.6 cents, its lowest price since June 2012. Photograph: Mario Proenca/Bloomberg

Wed, Jul 16, 2014, 01:00

Markets went into retreat yesterday on renewed fears about Portugal’s Banco Espirito Santo and comments from Federal Reserve chairwoman Janet Yellen that left some speculating that the US central bank was not up to speed.

Ms Yellen told US lawmakers that the Fed should press on with monetary stimulus as there was still significant slack in labour markets, despite manufacturing data that were ahead of expectations.

DUBLIN

Traders said activity on the Irish market was mixed. Cider maker, C&C closed 0.3 per cent up at €4.318 after touching highs of €4.35 earlier as data for off-trade sales in the US indicated that the group may face less of a challenge than generally thought by investors.

International packaging group Smurfit Kappa inched ahead 0.19 per cent to €15.50 on indications that prices in some European markets may be hardening.

Low-cost airline Ryanair, which has launched a smartphone app that cuts out the need for printed boarding passes, slid 0.59 per cent to €6.759.

Bookmaker Paddy Power rose 1.7 per cent to €50.85, although less than 100,000 shares in the company were traded yesterday.

LONDON

Provident Financial dropped 1.8 per cent to 2,126 pence. JPMorgan lowered its rating to neutral from overweight, similar to a change to hold from buy, citing the recent rally in the stock. Up to Monday, Provident rose 33 per cent this year.

African Barrick rallied 2.8 per cent to 232.9 pence. Vedanta Resources added 1.8 per cent to 1,107 pence. A gauge of mining stocks in the FTSE 350 Index climbed 1 per cent.

Michael Page International rose 2.5 per cent to 438.5 pence. The company said second-quarter gross profit at constant currency rates increased to £137.2 million. Michael Page also maintained its full-year growth forecast. Canaccord Genuity Group advised investors to buy the stock.

Intermediate Capital Group advanced 5.2 per cent to 397.4 pence. JPMorgan raised its recommendation on the stock to overweight, or buy, from neutral. Imperial Tobacco fell 3.5 per cent to 2,643 pence.

EUROPE

Software AG sank 19 per cent to €20.07. Germany’s second-largest software maker said operating profit dropped 23 per cent to €45 million in the second quarter because of project delays. The company also lowered its full-year forecast.

Espirito Santo plunged 11 per cent to 39.6 cents, its lowest price since June 2012. Rioforte Investments, a holding company of the troubled Portuguese group, owes €847 million in short-term debt to Portugal Telecom SGPS, according to a June 30th regulatory filing by the nation’s biggest phone company. Rioforte holds a 49 percent stake in Luxembourg- based Espirito Santo Financial Group, which owns 20 per cent of Espirito Santo. Spain’s Bankia dropped 3 per cent to €1.37 and Italy’s Mediobanca lost 4.1 per cent to €6.78.

PSA Peugeot Citroen climbed 3.7 per cent to €11.50, extending yesterday’s 3.1 per cent gain. Europe’s second-biggest carmaker reiterated the financial targets it presented in April. Peugeot expects recurring positive operating free cash flow by 2016 at the latest, according to a statement.

JPMorgan Chase raised its rating on the stock to overweight, similar to a buy recommendation, from neutral, saying Peugeot’s first-half results will mark the start of a recovery in free cash flow.

US

Wall St posted modest gains in the early portion of trading on the back of earnings reports from JPMorgan Chase, up 4.2 per cent to $58.64, and Goldman Sachs, up 0.6 per cent to $168.09.

But fellow Dow component Johnson & Johnson lost 1.2 per cent to $104.17. The diversified healthcare company reported higher-than-expected quarterly results on sizzling sales of its new Olysio treatment for hepatitis C, but cautioned the pill will lose steam later this year.