Iseq falls to seven-month low on fears over global economy
Bank stocks among worst performers across Europe amid speculation about ECB move
Wall Street stocks tried to move higher on Thursday. Photograph: AFP
The Iseq stock market index in Dublin and wider European equity markets fell on Thursday as investors became increasingly worried about the global economic outlook.
Bank stocks were among the worst performers across the board amid speculation that the European Central Bank will take an aggressive line next month as it unveils stimulus to reboot the euro zone economy and inflation.
The Iseq index lost 0.9 per cent to 5,679.77, falling below the 5,700-point level for the first time in seven months, while the pan-European Stoxx 600 index dropped 0.3 per cent to 365.09.
Permanent TSB slid 4.8 per cent and Bank of Ireland fell 0.9 per cent to €3.13, as sector followers fretted over the global economy, Brexit and the prospect of the ECB cutting rates next month as part of a suite of stimulus measures. Low interest rates squeeze banks’ lending margins.
Aryzta was also out of sorts, dropping 5.4 per cent to close at an all-time low of 64c, after UBS analyst Joern Iffert slashed his share price target and earnings forecasts for the baked goods company, saying weakening consumer confidence could hit its sales, while the timing of savings from a cost-cutting programme is uncertain.
House builders dropped, with Glenveagh Properties off 2.5 per cent and Cairn Homes down 1.9 per cent, as the market continued to digest news on Wednesday that property-price growth had eased to its slowest rate in six years in June.
The Ftse 100 shed 1.1 per cent to close at 7,067.01. Multiple factors were weighing on the index, chiefly a gloomy global economic mood after fears were raised that the UK and countries around the world could be heading for a recession.
An inverted yield curve – where short-term government bonds become less attractive than long-term notes – in the UK and US has spooked markets over the past two sessions.
Energy and mining stocks in particular incurred heavy losses as oil and metal markets dropped on fears that demand would dwindle in a downturn.
In company news, Ladbrokes owner GVC pushed its profit forecasts higher as its UK high street stores performed better than expected despite the clampdown on fixed-odds betting terminals. But shares slipped by 0.3 per cent to 545.2p.
Royal Bank of Scotland saw shares plummet 10.5 per cent to 177.65p after two key brokers lowered their forecasts for the lender.
Weighing on the benchmark Stoxx 600 index the most was a drop in automakers and commodity stocks, the sectors that tend to fall the most during trade uncertainties due to their reliance on exports and demand from China.
In earnings news, strong numbers from beer maker Carlsberg and food retailer ICA pushed shares of both companies to the top of the pan-region index.
Shares in Danish facility services provider ISS were at the bottom, extend losses following quarterly results, with analysts pointing to concerns over free cash flow.
US stocks were trying in mid-afternoon trade to recover from a steep sell-off a day earlier, as strong retail sales data and upbeat Walmart earnings eased concerns of a recession, but mixed signals on trade and Cisco’s dismal forecast capped gains.
Cisco Systems dropped after the Dow component blamed the bruising US-China trade war for poor quarterly forecasts.
Walmart shares rose after the retailer reported second-quarter US comparable sales that beat estimates and boosted its earnings forecast for the year.
The company’s strong report lifted the wider consumer staples sector, which gave the biggest boost to the market.
General Electric plunged as much as 15.3 per cent, and was on pace to post its biggest one-day drop in a decade, after a whistleblower in the Bernard Madoff Ponzi scheme case alleged that company financial filings masked the depths of its problems. – Additional reporting, Reuters