Tech sell-off brings Euro shares down as dollar hits 16-month high

European shares fell on Monday, led by a sell-off in technology stocks after earnings and M&A news from Germany, while tobacco was hit by new signs of US regulators tightening the screws on menthol cigarettes.

The US dollar, meanwhile, surged to its highest point in 16 months against a basket of currencies while Brexit fears sank the pound.

DUBLIN

The Iseq overall index dropped 0.6 per cent on Monday with financials particularly badly hit on the day.

Pillar banks AIB and Bank of Ireland dipped 1.78 per cent and 2.84 per cent respectively despite no stock-specific news. News surrounding euro zone peer Banca Carige, however, underscored concerns about the health of the banking sector in Italy. Bank of Ireland closed at €6.16 while AIB fell to €3.87.

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European airlines took a hit following an announcement Saudi Arabia would cut its oil supply in December, which led to a jump in crude oil prices. Ryanair fell 2.24 per cent to €12.68 but outperformed its budget rival EasyJet.

A fall in Irish construction PMI (purchasing managers' index) to a three-year low negatively affected housebuilders on the day. The figures, which suggested Brexit uncertainties are beginning to weigh on sentiment, led Glenveagh Properties down 1.79 per cent to €0.82 and Cairn Homes down 1.28 per cent to €1.39.

On the other end of the Iseq, Kingspan closed up 0.62 per cent to €42.42 after it reported that sales increased 18 per cent to €3.18 billion in the nine months to the end of September. Elsewhere, Hibernia Reit closed up 0.89 per cent to €1.36 after it announced it had acquired more than 92 acres of land in Dublin from the Irish Rugby Football Union.

LONDON

The FTSE 100 lost 0.74 per cent while the pound was close to 1 per cent lower against the dollar after UK prime minister Theresa May’s Brexit strategy came under attack from all sides.

British American Tobacco shares posted the worst performance of the index, falling as much as 10.6 per cent to their lowest since February 2014 after a Wall Street Journal report that the US Food and Drug Administration plans to pursue a ban on menthol cigarettes.

Imperial Brands shares were down 2.1 per cent.

Oil majors BP and Royal Dutch Shell were among the few heavyweights adding points to the FTSE, up 0.8 per cent and 0.7 per cent respectively.

Shares in London-listed Shire rose about 2 per cent after Takeda Pharmaceutical said it would hold an investor vote on its acquisition of the company and aimed to close the deal on January 8th.

EUROPE

The pan-European STOXX 600 benchmark index fell 1 per cent, reversing earlier gains.

Just before the market close, Italy's Banca Carige approved measures totalling €400 million, including the issue of a subordinated bond which is convertible into shares. The main Italian stocks index fell 1 per cent.

Technology stocks, among the worst-hit by sell-offs in past weeks, were the biggest sectoral fallers, down 3.7 per cent. Chipmaker Infineon and SAP sank to the bottom of the DAX, down 7.8 per cent and 5.6 per cent respectively.

Among the risers, Telecom Italia advanced 2.8 per cent as investors welcomed reports that the company's network business will be merged with smaller rival Open Fiber.

NEW YORK

Major US stock indices dropped more than 1 per cent in initial trading, weighed down by a 4.6 per cent slump for index heavyweight Apple.

Apple shares fell as the main supplier for its Face ID technology, Lumentum Holdings, slashed revenue and profit forecasts, citing reduced orders from a major customer.

Lumentum shares tumbled 31.3 per cent and shares of other Apple suppliers also dropped.

The S&P 500 technology sector, a main driver of the long US bull run in stocks, tumbled 3.0 per cent.

– Additional reporting: Reuters