Banks pull stocks lower as Brexit continues global rout

Iseq closes down 9.9% with Bank of Ireland losing 21% and Ryanair ending 15% lower

European bank shares had their worst two-day fall on record and world stocks, as measured by MSCI were on track for worst two-day fall since the aftermath of the Lehman Bros collapse in late 2008. Photograph: EPA

European bank shares had their worst two-day fall on record and world stocks, as measured by MSCI were on track for worst two-day fall since the aftermath of the Lehman Bros collapse in late 2008. Photograph: EPA

 

Britain’s decision to leave the European Union sent new shockwaves through financial markets yesterday, with the pound falling to a 31-year-low despite the country’s leaders’ attempts to ease political and economic turmoil unleashed by the move.

European bank shares had their worst two-day fall on record and world stocks, as measured by MSCI were on track for worst two-day fall since the aftermath of the Lehman Bros collapse in late 2008.

Bank stocks index fell 7.7 per cent, wiping out more than one-fifth of its value in two days and ending just a handful of points above lows reached at the height of a euro zone debt crisis at the end of 2011.

DUBLIN Irish shares suffered badly again yesterday with the Iseq closing 9.9 per cent to 5.296.74 to hit a fresh year-and-a-half low.

Bank of Ireland was among the losers, sliding 21 per cent to 17 cents after Deutsche Bank highlighted the lender’s exposure to the UK market. Permanent TSB was down 17 per cent to €1.49.

Ryanair, which has heavy exposure to the UK market, lost 15.2 per cent. Earlier in the day rival EasyJet said it would take a £28 million hit following two months of turbulence.

Other big fallers in Dublin included Iseq heavyweight CRH, which was down 9 per cent to €23.31, Aryzta, down 8.57 per cent to €31.14, and Glanbia, down 8 per cent to €15.61.

LONDON

Some investors took refuge in firms producing gold, seen as a safe-haven asset, with Fresnillo closing up 7 per cent after hitting a three-year high and Randgold Resources gaining 9 per cent.

The FTSE 100 ended 2.6 per cent lower at 5,982.20 points, taking total losses to 5.6 per cent in two sessions and wiping off nearly £100 billion since the referendum results early on Friday.

UK banks were badly hit, with Royal Bank of Scotland losing 23 per cent and Barclays sliding 18 per cent.

Shares in EasyJet slumped 22.3 per cent to a three-year low after it issued a third-quarter profit warning. British Airways owner IAG fell 15.9 per cent, also after Goldman Sachs cut its shares to “neutral”.

EUROPE

The Stoxx 600 Banks Index, which included European companies involved in banking, fell 7.6 per cent after dropping 14 per cent on Friday. The volume of European shares changing hands was almost three times the 30-day average. UK banks were particularly badly hit but Italian banks also suffered with UniCredit losing more than 9 per cent.

Spain’s IBEX outperformed to end down 1.8 per cent with shares in bank Bankia rising more than 6 per cent and Caixabank ending down 1.6 per cent.

NEW YORK

The Dow Jones industrial average fell 1.5 per cent to 17,140.24, the S&P 500 lost 36.87 points to 2,000.54.

Banks continued to be among the worst-hit as traders discounted chances the US Federal Reserve will raise interest rates in the near term. Bank of America, down 6.3 per cent, and JPMorgan, off 3.3 per cent, were among the biggest drags on the S&P, while the KBW Bank index fell 5.1 percent.

With sterling hitting a 31-year low, the dollar posted sharp gains, dealing a blow to US companies that receive a large portion of sales from overseas.

(additional reporting Bloomberg / Reuters)