Declines in miners, energy producers drag equities lower
Investors worry central banks less willing to use monetary policy to stimulate growth
Banks were among Ireland’s worst performers. Bank of Ireland lost 3.4 per cent to 19.7 cents. Photograph: Frantzesco Kangaris/Bloomberg
An early advance in European stocks evaporated as declines in miners and energy producers helped extend the lowest level for equities in more than a month.
The Stoxx Europe 600 Index slipped 1 percent at the close, reversing a gain of as much as 0.6 per cent after US markets opened. The benchmark capped its biggest four-day slump in two months, down 3.4 per cent, as investors fret central banks may be less willing to use monetary policy to stimulate growth.
The Iseq index of Irish shares ended the session in Dublin down 0.4 per cent, marking a third straight session of losses.
Banking stocks were among the worst performers as a European Central Bank consultation paper published on Monday highlighted the high level of non-performing loans that remain on Irish lenders’ balance sheets, even after declining rapidly in recent years.
Bank of Ireland lost 3.4 per cent to 19.7 cents, while Permanent TSB declined by 1 per cent to €2.03.
Looking at the Irish market more broadly, Merrion Capital analyst Darren McKinley said the tone of the first-half earnings season across publicly quoted companies was “more neutral”, after successive periods of much better-than-expected results and outlooks.
Smurfit Kappa lost 1.17 per cent to €22.04, while Aryzta dropped 0.7 per cent to €35.28.
Bucking the trend, Amryt Pharma soared 8.7 per cent to €8.70 as investors digested the company’s first-half results and progress since it was subject to a reverse takeover by former oil and gas company Fastnet earlier this year.
The company said it is now in the process of preparing for a pivotal phase III study for the use of Episalvan in epidermolysis bullosa treatment, which is expected to begin in early 2017.
Britain’s top share index fell for a third straight day, extending its decline after a steep drop in the previous session as oil stocks came under pressure and Associated British Foods was hit by broker downgrades.
The FTSE 100 was down 0.5 per cent at 6,665.63 at its close, adding to its losses from Monday when it fell more than 1 per cent.
Oil and gas stocks took 13 points off the index, tracking a fall in oil prices which dropped after the International Energy Agency said it saw an oil glut persisting. BP and Royal Dutch Shell were down 1.9 perc ent and 1.4 per cent respectively.
Mining companies were also under pressure, tracking weakness in the price of copper.
Associated British Foods was among the biggest fallers, down 2.6 per cent, taking declines this week to nearly 13 per cent.
The stock fell steeply on Monday after results, hit by lacklustre trading at its Primark clothing chain. On Tuesday, it suffered a spate of broker downgrades.
British Land dropped 2.7 per cent after Deutsche Bank cut its target price on the stock.
Over on the FTSE 250, Ocado slumped 13.7 per cent after the online grocer warned of sustained margin pressure due to an intensely competitive market.
Sports retailer JD Sports gained 5 per cent, having risen as much as 10 per cent earlier in the session to a record high, after reporting a jump in first half revenue and profit.
In a broad-based decline, almost all Stoxx 600 industry groups and western-European markets fell on Tuesday. Equity gauges of Spain, Italy and Portugal dropped the most, down more than 1.6 per cent.
Banco Santander, UniCredit and Banco Comercial Portugues slid more than 2.7 per cent as Europe’s lenders posted their biggest two-day slump in more than a month.
Among other shares active on corporate news, German industrial gases and engineering company Linde climbed 4.6 per cent as it announced the departure of its top two executives following the collapse of its planned merger with Praxair. The German group slumped the most in nine months on Monday in the wake of the deal’s failure.
Partners Group Holding climbed 8.4 per cent after the Swiss investment firm reported a jump in first-half earnings. French industrial gas supplier Air Liquide gained 4.8 per cent after saying it’s starting a€ 3.3 billion rights issue to help finance its takeover of Airgas.
US stocks were lower in mid-afternoon trading, with energy stocks hit by lower oil prices and financials dropping on diminished prospects of a near-term rate hike.
Three Federal Reserve officials, including board governor and voting member Lael Brainard, on Monday took a dovish stance on interest rates, in contrast to more hawkish comments from other officials in the past two weeks.
By mid-afternoon, the Dow Jones Industrial Average was 1.36 per cent lower, while the S&P 500 was off 1.54 per cent and the Nasdaq Composite was down 1.35 per cent.
One bright spot in the market was Apple, which jumped 2.6 per cent after two carriers reported strong demand for the new iPhones.
Mining group Freeport McMoRan tumbled 8.8 per cent on a deal to sell some Gulf of Mexico assets to Anadarko Petroleum, which dipped only 0.2 per cent. Some analysts called the $2 billion deal value inexpensive. – (Additional reporting: Bloomberg, Reuters)