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Irish Independent
07-06-2025
- Business
- Irish Independent
Irish shares hit all-time high despite tariff uncertainty
The Iseq 20 index of leading Irish shares hit a record high of 1963.01 yesterday, slipping back only slightly before closing at 1,956.02. The index is made up of the leading shares on the Euronext Dublin exchange, including heavyweights Ryanair, Kerry, Kingspan and Glanbia as well as AIB and Bank of Ireland. Shares hit their high after the European Central Bank (ECB) cut rates for an eighth time in 12 months on Thursday, a move that would traditionally be seen as a boost to investment, credit and consumer confidence. The MSCI global index, which draws on leading shares from across the developed world, hit an all-time high on Tuesday, boosted by particularly strong gains for Germany's Dax index. In Ireland, the Iseq 20 index only at the start of this year recovered to levels seen in 2007, at the peak of the Celtic Tiger, unlike most European and US markets where shares have long since pushed higher over the past decade. However, the composition of the Irish shares indices has also radically changed, not just since 2007 – when bank shares crashed – but in the past three years as heavyweight stocks like CRH, Flutter and Smurfit Kappa shifted their listings to the US, shrinking the potential size of the Irish index. The Irish high this week was in line with global and European trends. Wall Street rebounded yesterday after a generally upbeat employment report, and a bounce-back in Tesla shares helped put the indexes on track for weekly advances. In the US, jobs numbers yesterday were relatively weak but not as bad as feared, and markets shifted higher in response. This is a sigh of relief report The US economy added 139,000 jobs in May while the unemployment rate held firm at 4.2pc, according to the Labour Department. 'This is a sigh of relief report; people were really worried that this was going to be a kind of start of a downturn in the labour market and therefore start the downturn in the economy,' said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina. 'It came in pretty much on the screws and we've got a bit of a reprieve, at least for a month. That's leading to a pretty large relief rally,' Mr Ladner added. In Ireland and across the globe, investors are increasingly looking past the near-term risk of Donald Trump imposing further destabilising tariffs and anti-trade measures, and are focused on the underlying economy, which has so far shrugged off any real negative fallout. How long that can be sustained remains to be seen. Bank of America's influential strategist Michael Hartnett warned yesterday that global stocks are getting close to triggering a technical 'sell' signal, saying the market is running too hot after surging 20pc in just two months. He cited data points on fund flows and market breadth as evidence that investors have been rushing into risk assets and positioning is getting stretched. Traders often use that as a marker because it can theoretically indicate that the buying power in the market is likely to soon be exhausted, leaving prices vulnerable to a pullback. At the same time, the market is approaching 'overbought territory,' he said. The Bank of America data highlights a nervousness among traders about the rapid pace of recent stock gains. The combination of the Trump administration's tax-cut package to boost growth, plus a softer stance on tariffs and robust economic data, has fanned optimism. US equity futures rallied yesterday after the monthly jobs report came in stronger than expected. In Europe, the new German government's push to support industry as well as ECB easing of credit has fed into the rising stock markets. However, major risks are hovering close to the surface. Mr Trump has set a July 9 deadline for talks with the European Union to produce a trade deal, threatening a 50pc tariff on European goods if they fail. The White House has yet to lock in trade terms with China, Japan or Canada. Meanwhile, Mr Trump's public falling out with Elon Musk has been playing on stock markets as the main driver of swings in Tesla's share price, both higher and lower at different times this week.
Irish Independent
05-06-2025
- Business
- Irish Independent
Markets hover near all-time high despite latest tariffs drama
In Europe, shares in Germany's DAX index hit a record high after the new coalition government there approved a €46bn package of corporate tax breaks as part of a push to revive economic growth, and ahead of an expected interest rate cut on Thursday from the European Central Bank. The Stoxx Europe 600 Index of European shares closed up 0.5pc after it pared some earlier gains following weaker-than-expected US jobs data. European shares are increasingly outperforming the US, closing what had been a yawning valuations gap. US stocks are close to their own highs, having recouped the 20pc suffered in April during the initial phase of the reaction to Donal Trump's tariffs. While the White House has rowed back on its most extreme tariff policies, it did pull the trigger on Wednesday on a huge 50pc tariff on imports of steel and aluminium, double the size of a tariff first announced in February. The steel levy, imposed for supposed national security reasons, is outside the scope of a US court that last week ruled much of the Trump tariff regime was illegal. The decision to push ahead with the higher rate came after the White House was stung by the new insult that Trump always chickens out (TACO). Canada, the biggest exporter of steel to plants including in the US industrial belt close to the border, will be worst hit. The MSCI index made up of a basket of stocks from across the developed world – and therefore a good guide to confidence in the global economy – touched an all-time high on Monday and remained close to it on Wednesday. In Dublin, the Iseq 20 index of Irish shares hit a high on May 29, and remains close to it. The numbers point to investors increasingly looking through the tariff threat, despite the noisy policy shifts, at least until next month when a number of 90-day tariff 'pauses' are due to roll off. Talks – including between the EU and US, Canada and the US, and the US and China – all aimed at influencing the July deadlines are currently taking place. 'As the market continues to move higher, I think investors are simply saying look, the trend is your friend, and just like white-water rafting they will let the market take them where it wants to go,' said Sam Stovall, chief investment strategist of CFRA Research in New York. 'The markets are going through some sideways movement until we get into July because then we'll have a better read on what kind of an impact tariffs have had on Q2 economic growth and earnings, and give a better idea as to what might happen for the remainder of this year.'
Irish Independent
27-05-2025
- Business
- Irish Independent
Stock markets rebound after latest Donald Trump tariff U-turn
The picture was much the same across Europe after Mr Trump said he would extend a deadline for talks into July. Markets in London and New York were closed for a long weekend. The Stoxx Europe 600 Index gained 1pc. In Ireland, the Euronext Dublin was up slightly less, with the Iseq 20 index of leading Irish shares gaining 0.92pc, with broad gains across sectors. The rebound came after stocks fell in Europe on Friday when Mr Trump threatened a shock 50pc levy on the EU starting June 1. He had complained that the EU lacked urgency in trade talks and unfairly targeting American companies with lawsuits and regulations. The rebound on Monday came after he agreed to push the deadline for a deal to July 9 following a phone call with European Commission president Ursula von der Leyen. "This is nothing more than the usual 'threat and retreat' that has been the modus operandi of this tariff tennis we have witnessed since the start of the year," said Florian Ielpo, head of macro research at Lombard Odier Investment Managers. "European valuations outperforming in this context and the EUR progressing vis-a-vis the dollar are yet more signs that European stocks continue to look attractive in this high-uncertainty environment." The EU had been slated for a 20pc tariff under the reciprocal rates announced in April, and a temporary pause took the rate down to 10pc through July 9. Ensuing expectations for a trade deal lifted sentiment, with the Stoxx 600 bouncing 18pc from an April low through its recent high last week. Cyclical stocks had a sharp rally. "'Less bad news' has been lifting valuations, but now we need 'more good news' to fuel this rally – good news on both the fiscal front and the growth front," said Mr Ielpo. Among individual movers, Thyssenkrupp AG advanced 8.3pc after it said it planned to become a strategic holding company with independent business segments.
Irish Independent
07-05-2025
- Business
- Irish Independent
Markets slip amid fresh US tariff talk, but AIB bucks the trend
The latest strain came despite a lack of specifics on how or when either sector would be affected. Lack of any sign of progress on purported talks between the US and China to reopen trade between the world's two biggest economies also weighed on investor mood. The dollar is carrying the brunt of the impact as investors have reacted to uncertainty by shifting away from US assets, pushing the euro, yen and Swiss franc higher. On Tuesday, the dollar index, which measures the greenback against a basket of currencies, including the yen and the euro, fell 0.38pc to 99.43. The euro was up 0.27pc at $1.1346. Against the Japanese yen, the dollar weakened 0.6pc to 142.84. The Canadian dollar and sterling also strengthened versus the dollar though the Swiss franc weakened. The latest falls in equities was orderly and not uniform. In Dublin, the Iseq 20 index of leading shares closed down but AIB ended the session up on Tuesday and above €6 each, edging towards the territory of a putative directed buyback of €1.2bn of State-owned stock. But the shares were unusually volatile – bouncing from a low for the day of €5.87 and a high of €6.155. That repeated a pattern of big intra-day swings seen last week, with similar daily highs and daily lows recorded on Friday and Thursday. The bank's board will decide by on Thursday whether to go ahead with the buyback at a minimum of €6.26 a share after shareholders overwhelmingly approved the proposal last week despite a yawning gap between the trading price of the stock and the level the deal was struck. AIB must determine the plan is in the bank's best interests, including pricing, if it is to press ahead with the deal. The closer the stock is to the €6.26 level the more likely the board is to be comfortable with pressing go on the deal. In London, shares in BP rose after a Bloomberg report on Monday that Shell is working with advisers to evaluate a potential acquisition of its UK rival. The London Stock Exchange was closed on Monday due to a bank holiday. The takeover report suggested Shell has discussed the feasibility and merits of a BP takeover with advisers in recent weeks, although it's waiting for further stock and oil price declines before deciding whether to pursue a bid. A combination of Shell and BP would be one of the oil industry's largest-ever takeovers, bringing together iconic British majors and long time rivals. BP is vulnerable to a takeover after its shares have lost almost a third of their value in the last 12 months as a turnaround plan has fallen flat with investors and oil prices tumbled. BP has been battling prolonged underperformance stemming in large part from a net-zero strategy embraced by former CEO Bernard Looney. His successor, Murray Auchincloss, announced a reset in February that included a pivot back to oil, cuts to quarterly share buybacks and promises to sell assets.
