Iseq boosted by financial shares as Ulster Bank wind-down buoys rivals

Euro-zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.

US stocks also gained, helped by a rise in economy-sensitive cyclical sectors, with the S&P 500 and the Nasdaq on track to end the week on a dull note as investors rotated out of technology-related companies.

Dublin

The Iseq rose by 1.74 per cent, driven by a 6 per cent spike in its banking index. This followed the news that Ulster Bank is to be wound down, sending shares of its rivals on an upwards curve.

AIB, which The Irish Times first reported is in talks to buy some of Ulster Bank's loan book, raced ahead, finishing the session ahead by almost 8.2 per cent at just under €1.74 per share.

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Permanent TSB, which also disclosed that it is in talks to buy some of Ulster's loan book, soared by almost 11 per cent to close at €1.03. Bank of Ireland's bounce was more muted. It closed ahead by 3.2 per cent at €3.37 per share.

On the downside, resource stocks suffered. Providence Resources was down almost 20 per cent to just under 7 cents, while Ormonde Mining fell 12.5 per cent to 2.1 cents.

London

London’s FTSE 100 ended higher after the economy showed signs of improvement this month and was set to gain for the third consecutive week as investors bet that vaccine rollouts would spur economic growth.

NatWest gained 5.2 per cent and was the third-biggest gainer on the FTSE 100 Index after it said it would wind down its Irish arm, Ulster Bank, as chief executive Alison Rose continues to slash away at underperforming parts of the state-owned lender after it swung to a loss in 2020.

Segro rose 1.5 per cent after the real-estate investment trust reported a near 11 per cent jump in annual profit for 2020.

Banking group TBC Bank fell 6.1 per cent after a slump in annual underlying profit due to lower interest rates and limited lending growth in the fourth quarter from the Covid-19 pandemic.

Europe

The euro-zone index was up 0.9 per cent, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery. The pan-European Stoxx 600 index rose 0.5 per cent, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.

French carmaker Renault tumbled more than 4 per cent after posting a record annual loss of €8 billion, while food group Danone and German insurer Allianz rose following upbeat trading forecasts.

Danone climbed 2.2 per cent after chairman and chief executive Emmanuel Faber said he was opening talks with shareholders amid growing pressure for the yogurt maker to revamp leadership roles.

Tech shares also outperformed, with chipmakers up after BE Semiconductor Industries gave a favourable outlook.

New York

Seven of the 11 major S&P sectors rose, with financials , energy, industrials and materials jumping more than 1 per cent. The S&P 1500 airlines index also soared 3.8 per cent. Stay-at-home winners Microsoft, Facebook and Netflix fell between 0.4 per cent and 2.3 per cent, sticking to a trend seen for most parts of the week.

Applied Materials rose 7.5 per cent, and was among the top boosts to the Nasdaq, after it forecast second-quarter revenue above market expectations, as demand for its semiconductor manufacturing tools picked up during a global shortage of semiconductors.

The Dow Jones Industrial Average was up 0.39 per cent, led by Caterpillar, which rose 4.3 per cent to the top of the index, after the world's largest farm equipment producer Deere & Co raised its outlook on improved demand. Deere jumped 10.2 per cent. – Additional reporting: Reuters/Bloomberg