European markets decline again as Brexit fears persist

European markets sold off again on Wednesday as Brexit concerns persisted. Major banks and other financial stocks led equities lower as investors fretted over the impact of the UK's vote to leave the European Union and the prolonged political and economic uncertainty that this will cause.

Energy stocks also declined as oil prices slipped on worries that demand would ease.

Sterling sank below $1.30 for the first time in more than three decades. Markets are now pricing in a good chance of a cut in one or more of the Bank of England’s official interest rates to zero within the next three months.

DUBLIN

The Iseq closed down 1.75 per cent, with falls for most of its biggest stocks. Building materials group CRH declined 1.7 per cent to €24.52.

Ryanair retreated 1.6 per cent to €11.00. Several Ryanair bases in Germany were searched as part of an investigation into tax evasion by two employment agencies through which pilots are employed. The airline is not the subject of the investigation.

Bank of Ireland and food companies Fyffes, Kerry and Origin were among the fallers, though dairy company Glanbia climbed 3.6 per cent to €16.40. Drinks group C&C, which is due to give a trading update to investors today, declined 2.4 per cent to €3.45. Smurfit Kappa fell 4.2 per cent to €19.28.

The Green Real Estate Investment Trust (Reit) dropped 1.1 per cent to €1.42. Analysts at stockbrokers Merrion reiterated their “buy” recommendation.

Tullow Oil, which has its primary listing in London, plummeted almost 18 per cent on low volume as oil stocks declined. Tullow is launching an offering of $300 million of five-year convertible bonds.

LONDON

The FTSE 100 index was led lower by retail and property-related stocks, which extended their post-Brexit losses. The index of blue-chip stocks closed down 1.3 per cent, with the decline limited by a rally in precious metal mining stocks as the safe-haven investment of gold hit a two-year peak.

The more domestically focused mid-cap FTSE 250 index, which has borne the brunt of investor worries since the Brexit vote, finished 0.4 per cent lower.

Oil and gas shares weakened with the sector index off 1.1 per cent. Tullow Oil slumped 12.3 per cent.

Property firms, banks and retailers continued their slide with Royal Bank of Scotland slipping more than 6 per cent to its lowest level since January 2009.

Retailers fell back after analysts at HSBC raised the prospect of deepening supermarket price wars. Tesco and Morrisons fell 8.1 per cent and 7.2 per cent respectively.

Property-related companies came under further selling pressure as shares in Barratt Development and Taylor Wimpey fell more than 4 per cent on concerns about the sector’s growth outlook.

EUROPE

The pan-European STOXX 600 and the similar FTSEurofirst 300 index fell 1.7 per cent and 1.6 per cent respectively, both striking a third consecutive day of losses. In Frankfurt, the Dax fell 1.7 per cent, while in Paris, the Cac 40 index closed down 1.9 per cent.

Caixabank dropped 1.6 per cent after the Spanish lender warned it expected a €1.25 billion hit related to mortgage clauses, while shares in Deutsche Bank and Credit Suisse touched record lows.

US

Wall Street stocks reversed early losses after the release of positive US economic data and a turn higher in oil prices. The Dow Jones, Nasdaq and S&P 500 were nudging upwards by lunch time in New York.

Facebook rose 1.5 per cent to $115.73 and provided the biggest boost to the Nasdaq and S&P.

Amazon. com and Home Depot rose about 1 per cent, as stocks exposed to discretionary spending by consumers advanced.

– (Additional reporting: Reuters)