Catalonia crisis hits European shares, but Wall St soars

European shares fell on Wednesday on the back of the crisis in Catalonia, while US secretary of state Rex Tillerson insistence that he did not consider resigning from the Trump administration buoyed Wall St.

Dublin

Ryanair was one of the main movers in the Irish market, and finished the day down 0.5 per cent after earlier being up as much as 2 per cent. An analyst with Davy pointed to media reports surrounding the possibility of pilots going on strike, as well as defections to easyJet, having "moved the share price".

Other movers included Bank of Ireland, which was down 0.5 per cent after continuing a recent trend. AIB closed the day at a high of €5.07. Glanbia finished strongly, up 2.5 per cent.

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Cairn Homes finished the day down 1.2 per cent. The Davy analyst said the drop was likely a reaction to Glenveagh Properties, a new Irish housebuilder backed by US private equity firm Oaktree Capital, preparing an initial public offering (IPO) for next week.

Elsewhere in property, Green Reit was down 0.8 per cent to €1.52. It was a similar story at Hibernia Reit, which finished down slightly at €1.48.

Building materials company Kingspan finished up 2.4 per cent. "It's been on a very good run and has benefited from a regulation change in France around buildings being penalised for inefficient energy ratings," said the Davy analyst. "Kingspan would be a beneficiary of that, given it produces insulation."

London

Energy providers Centrica and SSE dragged on Britain's main share index after UK prime minister Theresa May announced plans to cap energy prices.

The FTSE 100 closed flat at 7,467.58 points after British Gas owner Centrica sank more than 6 per cent, closely followed by a 3.2 per cent fall in SSE. Both energy providers had been falling earlier in the session as traders anticipated an energy policy announcement.

Food retailers were also among top fallers, with Tesco down 3.2 per cent and closely followed by Sainsbury and Morrisons.

A rise in sterling also put pressure on the index, with the currency buoyed by robust services sector data. A stronger pound is a drag for the FTSE’s largely dollar-earning constituents.

Europe

European shares fell with Spain’s IBEX marking its biggest loss since last year’s Brexit vote shook equity markets. The impact of the crisis in Catalonia spread from Madrid and Spanish banks to the wider industry and euro zone region, particularly Italy.

The pan-European STOXX 600 index was down 0.1 per cent at its close while Spain’s IBEX posted a 2.9 per cent loss. Catalonia-headquartered Caixabank and Banco Sabadell, the stocks most sensitive to the rising political risk, sank 5 and 5.7 per cent respectively.

Italian banks also took a hit as yields on Italian sovereign bonds rose, with Banco BPM and UBI Banca losing 5.3 and 3.8 per cent respectively. The broader euro zone banking index dropped 2.2 per cent, its worst fall since mid-May.

Energy stocks were down 0.6 per cent, dampened by caution that a rally that has lasted for most of the third quarter would not make it to the end of the year.

Germany's DAX, which was closed for a bank holiday on Tuesday, caught up lost territory with a new record high and was the only main bourse trading in positive territory, with a 0.5 per cent rise. Volkswagen rose 2.3 per cent and Daimler was up 1.2 per cent.

New York

Wall Street scaled new record highs after US Secretary of State Rex Tillerson denied reports that he considered resigning, allaying fears of fresh turmoil in the Trump administration.

The S&P 500 and the Nasdaq reversed early losses following Tillerson’s comments, while the Dow extended gains.

Meanwhile, latest economic data helped soothe investors who had been worried about Hurricanes Harvey and Irma dragging on US economic growth. The vast services sector overcame hurricane-related snags to expand at its fastest pace in 12 years.

Just before lunch Eastern time in the US, the Dow Jones Industrial Average was up 34.55 points, or 0.15 per cent, at 22,676.22. The S&P 500 was up 4.73 points, or 0.19 per cent, at 2,539.31. The Nasdaq Composite was up 8.83 points, or 0.14 per cent, at 6,540.54.