Dropping oil prices continue to dampen stock markets

Dropping oil prices, though seen as being a boost to many sectors, served to dampen stock markets around the globe. The effect of the oil price drop created concerns about deflation across Europe. In the US, positive news on the industrial production and merger fronts was not enough to fend off the effects of the oil price movements.

The Iseq index of Irish shares closed down 2.34 per cent, at 4,955.58.

DUBLIN

Construction materials group

CRH

announced it is to dispose of its British and US clay brickwork business to US buyout firm Bain Capital for £414 milion (€521 million).

Davy noted that the deal marks "an impressive and welcome delivery of strategy" from CRH's chief executive Albert Manifold. CRH has sold off some €900 million in assets in recent months, from an expected €1.5-€2 billion in total disposals. The stock closed €17.85, a fall of 2.62 per cent.

Bank of Ireland had a bad day, closing down 5.83 per cent, at €0.30.

Airlines Aer Lingus and Ryanair both dipped during the day. The former closed at €1.78, a drop of 2.47 per cent, while the latter closed at €9.29, down 3.13 per cent.

LONDON

Britain’s top equity index, the FTSE 100, surrendered early gains as energy shares turned negative and miners slipped on persistent concerns about global demand for commodities such as copper and iron ore. It was down 1.3 per cent at 6,220.80 points by 3.45pm, after rising as much as 6,356.34 earlier in the session.

The UK mining index fell 2.3 per cent to a five and a half-year low, while the oil and gas index slipped 1.5 per cent to its lowest level in more than four years as prices of copper, iron ore and crude oil gave up early gains to turn negative.

Oil majors BP, BG Group and Tullow Oil were down 1.5 to 2.3 per cent, while blue-chip global miners Rio Tinto and BHP Billiton fell 2.2 per cent and 3.1 per cent respectively. Mid-cap Ukrainian iron ore miner Ferrexpo slumped 10 per cent.

Shares in MySale Group, in which Sports Direct has a 4.8 per cent stake, slumped nearly 50 per cent after the company issued a profit warning. Sports Direct is Britain's biggest sporting goods retailer and is majority-owned by founder and Newcastle United soccer club owner Mike Ashley.

However, Britain's biggest floor coverings retailer Carpetright rose 12 per cent after saying it expected full-year profit to be towards the upper end of market forecasts as trading improved both at home and abroad.

EUROPE

European shares tumbled, resuming last week’s sharp sell-off as the relentless drop in oil prices hurt energy shares and fuelled fears of deflation in the euro zone.

Italy's ENI fell 3.5 per cent and Spain's Repsol dropped 3 per cent. "The drop in oil would normally be good news for the European economy, but in this case it's actually bad news because it seriously raises the risk of deflation," said Christian Jimenez, fund manager and president of Diamant Bleu Gestion in Paris.

European Central Bank governing council member Ignazio Visco said that oil price declines would weigh on already-low inflation in the euro area in coming months.

Germany’s DAX index dropped 2.7 per cent, and France’s CAC 40 lost 2.5 per cent.

Shares in French seismic oil and gas services group CGG were the top losers across Europe, plummeting 29 per cent as rival Technip abandoned a takeover bid.

NEW YORK

US stocks fell, after the worst week in more than two years for the Standard & Poor’s 500 Index, as the continuing sell-off in oil prices overshadowed a surge in industrial production and corporate deals.

The S&P 500 fell 0.5 per cent to 1,992.63 at 12.34pm in New York, falling below its average price for the past 50 days. The gauge lost as much as 1 per cent, slipping below its 100-day moving average before paring the decline.

Shares of pet supply retailer PetSmart rose 4.5 per cent to $81.19 after it agreed to be bought by a private equity consortium led by BC Partners Ltd for $8.7 billion, in the largest leveraged buyout of the year.

Workers at Amazon warehouses in Germany began a three-day strike for better pay and work conditions as the online retailer raced to ensure holiday orders are delivered on time. Amazon shares were down 0.2 per cent at $306.79. (Additional reporting: Reuters, Bloomberg)