Iseq rises on eve of Brexit as bookmakers see UK remaining

Irish shares have rallied 6.6% from their lows last week

Irish shares rose on the eve the Brexit referenum, in line with global markets, as investors took their lead from bookmakers’ shortening odds on the UK remaining in the EU, even as polls indicated the race is too close to call.

The Iseq index rose 0.6 per cent to 6,290.5 points, delivering a 6.6 per cent rally in the past week. The FTSE 100 in London has recovered by more than 5 per cent from its mid-June lows, at the height of market nervousness over Brexit.

European shares, measured by the Stoxx 600 index, rose 0.4 per cent on Wednesday.

"The polls are saying that it's very close between the Leave and the Remain camps, but the bookmakers' odds point to the UK sticking with Europe," said David Holohan, chief investment officer with Merrion Captial in Dublin.


Among Brexit-sensitive stocks, IFG Group added 2.4 per cent, Bank of Ireland rose almost 2 per cent and Kingspan gained 1.8 per cent.

"It's just been one-way traffic for investors over the past week following the unfortunate death of [PRO-EUROPEAN]UK MP Jo Cox. But I think we could be in for volatility over the next few days as the markets remain on edge," he said.

The pound strengthened by 0.6 per cent to $1.4730 as the foreign exchange markets – seen as the key indicator for Brexit sentiment - adopted a cautiously upbeat tone a day out from the UK’s referendum. The sterling has rallied strongly so far this week on the back of polls that suggested the Leave campaign was losing momentum.

The British currency is already trading at levels economists forecast it would reach after a decision to stay in the EU. The median estimate in a Bloomberg poll of economists earlier this month was for it to trade in a range of $1.45 to $1.50 the day after a "Remain" victory.

“The odds of a Leave victory implied by betting market odds are much more modest than the polls imply at circa 25 per cent,” said analysts at RBC Capital Markets.

Both sides of the debate were making emotional appeals to the electorate on Wednesday, describing starkly different versions of the UK’s prospects outside the EU. A record number of Britons, 46.5 million, have registered to vote, according to the Electoral Commission.

Speaking to supporters in central London, UK Independence Party leader Nigel Farage invoked Winston Churchill, the Falklands war and cricketer Ian Botham to rally enthusiasm for his vision of the future outside the EU.

Former Prime Minister John Major, by contrast, called pro-Brexit campaigners "the gravediggers of our prosperity" in a speech in the city of Bristol.

If “Leave” is victorious, “we would be seriously diminished as a country,” he said. “I don’t want a broken Britain without influence.”

Elsewhere, Ryanair chief executive Michael O'Leary said a UK vote to leave the EU could lead the whole of the 28-nation block to unravel.

“If the UK leaves I think it’s inevitable that’s the end of the European project,” he said. “It will be very hard to keep the EU together, or at least the peripheral countries. The central countries – the Germans, the Dutch, the Belgians, possibly the French – will continue to go along, but the EU will be fatally damaged.”

(Additional reporting: Bloomberg, Financial Times Service.)

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times