Irish shares were back in all-too-familiar negative territory on Tuesday, as broader European markets extended their declines into a second day amid ongoing concerns about the impact of Brexit.
The Iseq closed 2.6 per cent lower at 5.522.3 points, near its lows of the session, while the Stoxx 600, a benchmark for the broader European market, dropped 1.7 per cent.
However, the FTSE 100 in London rose 0.4 per cent, lifted by new measures from the Bank of England to prop up the economy in the wake of the country’s vote to leave the European Union. The announcement pushed down sterling, giving the UK index a further boost, as a weaker pound would help exports.
“Part of the weaknesses or selloff today [across Europe] can be explained by some profit taking after a surprising week,” said Pierre Mouton, who helps manage assets at Notz, Stucki & Cie. in Geneva.
The Irish market had rebounded by 8.5 per cent in a four-day rally last week, recovering 40 per cent of their losses from the aftermath of Britain's vote to leave the EU. After the referendum, central banks in Europe and the UK pledged to make liquidity available, while traders pushed back bets for further Federal Reserve rate increases until at least 2018.
The wider European market had surged 7.6 per cent over the same four-day period.
Bank of Ireland led the Irish market lower, with the stock falling 7.6 per cent to 17 cents, while Ryanair dropped 3.3 per cent and CRH traded down 3.2 per cent.
On the currency markets, sterling fell to its weakest level in three decades against the dollar, surpassing lows reached in the aftermath of Britain’s vote to leave the European Union. The UK currency touched $1.30 and sank to its lowest since 2013 against the euro as evidence piled up that the Brexit vote is hurting confidence in the UK economy.
The pound briefly pared its losses as Bank of England Governor Mark Carney outlined more tools to contain the fallout from the UK’s decision to quit the bloc. Speaking in London, he said his concerns about pound declines had been borne out since the Brexit vote.
(Additional reporting: Bloomberg.)
