MONDAY’S jump in banking stocks was followed by a hangover yesterday as the country’s lenders pared most of the gains posted in the session.
Bank of Ireland fell 4pc to 69c after Standard & Poor’s (S&P) cut its outlook to “negative” from “stable” and warned that the lender faces “considerable challenges” restoring its credit profile as the Irish economy recovers slowly.
“Our view is that the Irish economy is likely to recover only quite slowly, with household finances remaining stretched, asset prices unlikely to start appreciating materially for a couple of years and credit demand remaining muted for many years,” S&P said in a gloomy forecast.
Allied Irish Banks, fresh from celebrating the sale of its stake in Bank Zachodni, tumbled 4.6pc to 75c as ING Group said the bank “is not out of the woods yet”, following the sale and is still “likely” to end up in majority state ownership.
Another stock feeling groggy yesterday was Norkom which tumbled 15.8pc to 80c, extending the previous session’s 24 decline following a profit warning.
CRH was another loser, slipping 1.9pc to €13.20 after the building materials company was downgraded to “neutral” from “outperform” at Credit Suisse by equity analyst Harry Goad. His target price is €14 per share.
The ISEQ ended the session down 20.44 points, or 0.7pc, to 2795.04 points. Elsewhere in Europe, stocks were little changed with the Stoxx Europe 600 Index close to a four-month high, as better-than-estimated US retail sales offset a selloff in utilities and a slump in German investor confidence.
Stocks initially rallied after a government report showed sales at US retailers climbed in August for a second consecutive month. Separate figures from the ZEW Centre for European Economic Research showed German investor confidence fell more than economists forecast to a 19-month low in September.
In the UK inflation unexpectedly exceeded the government’s 3pc limit for a sixth month in August; while a UK housing-market gauge fell more than economists expected in August to the lowest since May 2009, according to the Royal Institution of Chartered Surveyors.
Electricity companies RWE and E.ON dropped after brokers downgraded Germany’s largest utilities. Philips lost 3.9pc after the world’s biggest lighting company set new financial targets for the next five years. Gamesa Corporacion Tecnologica paced advancing shares amid takeover speculation.
ARM Holdings retreated 4pc after the company said a number of executives sold shares in the UK designer of semiconductors that power Apple’s iPhone.
Ladbrokes dropped 1.2pc after Goldman Sachs downgraded its recommendation on the bookie to “sell” from “neutral.”
– Thomas Molloy
This comes as no surprise to me as I have pointed out in previous posts the two main banks are from any normal booking keeping standards, they are both bankrupt
They are engaged in hiding enormous losses behind dioubious financial instruments called derivates as they are not going to disclose these losses
I believe they are trying to drip feed the markets over the next 3-5 years if they can get the time from the government or they will try to pass them off to NAMA
There is some credence to this method as NAMA is the ideal vehicle to do so through the Toxic toilet that is Anglo Irish Bank
Stay away from Irish bank shares as I expect the State will eventually end up owing a majority holding of Allied Irish Bank and possibly a 49% stake holding of Bank of Ireland at best!
- S&P Downgrades Bank of Ireland Outlook to Negative (nytimes.com)
- Allied Irish Races to Raise $6.3 Billion After Sale (businessweek.com)
- S&P downgrades BOI outlook- cites economic difficulties in Ireland (politics.ie)
- S&P Downgrades Bank of Ireland Outlook to Negative (abcnews.go.com)
- S&P downgrades Bank of Ireland outlook to negative (seattletimes.nwsource.com)