Iseq share falls reflect investor worries over Brexit

Irish shares have fallen the most in four months amid deepening investor concerns that the UK will leave the EU.

Monday’s 2.3 per cent decline in the Iseq brought losses on the Irish market over the past four sessions to €6.2 billion.

Bank of Ireland, Irish Continental Group and C&C were among the worst performers. All are heavily exposed to the British market,.

"It's all about Brexit," said Bernard Swords, chief investment officer at Goodbody Wealth Management in Dublin. "The Brexit-sensitive names [on the ISEQ] came under pressure again. Markets across Europe are going to remain fairly jittery heading into the vote."

The Stoxx Europe 600 index, a gauge of the broader European market, fell 1.8 per cent as a series of opinion polls in the past week put paid to any optimism that the UK will decide to stay in the union when it goes to vote on June 23rd.

Investors are also positioning themselves for the US Federal Reserve’s rate decision, tomorrow’s comments by Fed chairwoman Janet Yellen’s commentary on the world’s largest economy, and Spain’s general election on June 26th.

"There are many uncertainties, so we could continue seeing declines and touch new lows in the days to come," said John Plassard, a senior equity- sales trader at Mirabaud Securities in Geneva.

“Even though nobody is expecting a rate hike,” he added, “Everyone will look at what Yellen will say at the press conference. We are days from the Brexit vote, and also days away from the election in Spain, while oil is lower and volatility is the highest in months.”

BoI most affected

Bank of Ireland fell 4.9 per cent to 23.2 cents, its lowest level in 2½ years. Analysts at investment bank JP Morgan warned that the Irish lender would be among European banks most affected by a Leave vote.

The UK accounted for about 43 per cent of BoI’s loan book at the end of last year.

Elsewhere, Irish Continental Group dropped 2.5 per cent and C&C dipped 3.4 per cent.

The sterling had a volatile session on Monday, tumbling after surveys for Guardian/ICM showed the UK Leave campaign enjoying a six-point lead over the Remain side. Leave now has 53 per cent support, compared to 47 per cent for the Remain camp, the poll found.

The pound slumped to a two- month low against the dollar before rallying to trim that fall to 0.13 per cent, at $1.42. The British currency fell by 0.4 per cent against the euro, to €1.261.

"We are really seeing some very thin liquidity," said Esther Reichelt, a Frankfurt-based currency strategist at Commerzbank. "Let's see what the 23rd will bring. From a currency market perspective, it doesn't seem to make sense to look any farther than that right now."

Elsewhere, crude oil hovered below $49 (€43.5) a barrel after brief gains as investors anticipated turmoil ahead of the upcoming referendum.

– (Additional reporting: Bloomberg)