Irish shares drop as Brexit uncertainty rattles banks

The Iseq stock index stood out as a weak spot across European markets as uncertainty over whether UK prime minister Boris Johnson would secure support from parliament for his Brexit deal weighed on banking stocks.

The Iseq dropped 1.1 per cent to 6,499.86, while the pan-European Stoxx 600 index managed to eke out a 0.1 per cent gain. The FTSE 100 advanced by 0.7 per cent as a fresh bout of sterling weakness buoyed the London market’s heavyweight exporting companies.

Dublin

AIB lost 4.9 per cent to €3.12, as traders left their offices concerned about the outcome of House of Commons votes, which were scheduled for later on Tuesday, on the European Union withdrawal agreement Bill.

Followers of the stock all but ignored comments from analysts such as Berenberg’s Eoin Mullany, who highlighted on Tuesday that Austrian lender Bawag getting approval from the European Central Bank to return €400 million of excess capital to shareholders bodes well for the AIB’s plan to hand back surplus money.

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Mr Mullany says AIB could start returning some of its €1.8 billion of excess capital after its non-performing loans fall to about 5 per cent at the end of 2019.

Bank of Ireland dropped 4.2 per cent to €4.26, while Permanent TSB dipped 0.5 per cent to €1.23.

Fellow Brexit-sensitive stocks, Ryanair and Applegreen lost 2.2 per cent and 2.1 per cent respectively.

Bucking the trend, CPL Resources added 2.2 per cent to 6.9 cents after the company issued a statement after the markets closed on Monday saying it had a "positive start" to financial year that began in July.

London

BP and Shell both gained more than 2 per cent and Asia-focused HSBC also rose after China signalled progress in trade talks with the US.

Other standouts in the index, whose components book most of their earnings abroad and benefit from sterling weakness, were AstraZeneca and BAT, while Durex condom maker Reckitt pared losses despite cutting its sales view for the second time this year.

Just Eat was the standout performer in the FTSE 100, surging 24.2 per cent to 732 pence after rejecting an offer by Dutch firm Prosus of 710 pence per share.

London-listed shares of travel firm TUI were among the few fallers, dropping 7.3 per cent after Morgan Stanley downgraded the stock and warned that concerns around Boeing's 737 MAX aircraft and demand uncertainty could be headwinds.

Europe

Business software group SAP's shares gained after saying it had reached a three-year deal with Microsoft to help its enterprise customers move their business processes into the cloud. The company also reiterated its forecast for the year and through to 2023.

In Switzerland, drugmaker Novartis added almost 1 per cent as it raised its 2019 target and reported better-than-expected revenue. UBS was one of the top gainers among banking stocks after Switzerland's biggest bank reported a smaller-than-expected loss in quarterly profit.

New York

US Treasury yields dropped in line with sterling's movements as investors bought safe-haven debt after a second vote in the Commons made ratification of Mr Johnson's deal by October 31st almost impossible.

Stocks were mostly higher earlier amid some upbeat earnings and talk of progress in the US-China trade negotiations. Upbeat forecasts from Procter & Gamble and United Technologies were offset by disappointing results from McDonald's and Travelers Cos, which added to the day's downbeat tone. 

The Dow fell 39.54 points, or 0.15 per cent, to 26,788.1, the S&P 500 lost 10.73 points, or 0.36 per cent, to 2,995.99 and the Nasdaq dropped 58.69 points, or 0.72 per cent, to 8,104.30. – Additional reporting, Reuters