A year after Brexit vote, European and UK shares diverge
Iseq closes lower with BoI and Permanent TSB losing out as investors flock to AIB
The New York Stock Exchange. The S&P 500 and the Nasdaq Composite were higher in late morning trading on Friday as technology shares rose and oil prices rebounded from multi-month lows. Photograph: Michael Nagle/Bloomberg
Another wobble in commodity-related shares and dollar earners put pressure on British blue chips on Friday, underscoring their underperformance against continental European peers a year on from Britain’s vote to leave the EU.
Friday marked the one-year anniversary of Britons voting in a referendum by a narrow margin to quit the EU, a shock outcome which then sent sterling, British and European stocks into a tailspin. While stocks have recovered sharply from their slump in the immediate aftermath, in dollar terms, British stocks continue to lag peers in Europe and elsewhere as a cloudy outlook for sterling dented appetite among foreign investors.
The pan-European STOXX 600 index was down 0.2 per cent as was Britain’s FTSE 100.
The focus on Friday in Dublin and elsewhere was of course on AIB, which made its return to public markets after a 7.5 year absence. Its value rose as much as 7.7 per cent to €12.9 billion before ending the day up 5.6 per cent.
On the flipside, Bank of Ireland was weak due to some investors using the stock to fund their position in AIB. BoI was down 3 per cent to 23 cent as a result on heavy volumes with more than 400 million shares traded overall. Permanent TSB also suffered, down 2.7 per cent to €2.80.
The Iseq as a whole fell for the third day in a row, down 1.3 per cent of 95.07 points to 6.993.24.
Other movers on Friday included C&C Group, which remained in the doldrums following the recent resignation of chief financial officer Kenny Neison. It lost 1.4 per cent to end the day at €3.18.
Ryanair and Dalata were also weak, down 1.7 per cent and 1.8 per cent respectively.
One year on from Britain’s shock vote to leave the European Union, cracks are starting to appear in the FTSE 100’s rally, as concerns on both political and economic fronts saw UK shares fall for a third week in a row. The blue chip FTSE 100 index was down 0.2 per cent at 7,424.13 points at its close, with mid caps up 0.1 per cent.
While the FTSE ended 2016 up more than 14 per cent, fresh political concerns stemming from a hung parliament in this month’s election and uncertainty around Brexit negotiations have put the brakes on UK shares this year.
Despite hitting a series of record highs along the way, British blue chips are up just 4 per cent year to date with the FTSE the weakest major European market in terms of performance.
On Friday, dollar earners were the biggest fallers, with health stocks AstraZeneca and Shire, as well as Smurfit Kappa and Diageo all down between 1.3 and 2.5 per cent.
The pan-European STOXX 600 index was down 0.2 per cent as falls among financials, pharma firms and energy shares weighed.
Insurer NN Group was one of the biggest fallers in Europe, down nearly 4 per cent after Dutch watchdog KiFid said that the firm must compensate one its clients in a mis-selling case.
The S&P 500 and the Nasdaq Composite were higher in late morning trading on Friday as technology shares rose and oil prices rebounded from multi-month lows.
Apple, Microsoft and Visa rose between 0.5 per cent and 1.5 per cent, and provided the biggest boost to the S&P and the Nasdaq.
The Dow Jones Industrial Average was little changed however, weighed by a drop in Home Depot and UnitedHealth.
Among stocks, Blackberry’s US-listed shares were down 11.8 per cent after the company’s quarterly sales missed analysts’ estimate.
Bed Bath & Beyond shares touched record low as the company reported a bigger-than-expected fall in same-store sales in the first quarter. A Deutsche Bank upgrade on steel companies, including US Steel and AK Steel, pushed up their shares about 4 per cent.
Additional reporting: Reuters