REITs and AIB pull underperforming Irish market down

World equity markets were little changed and safe-haven bonds climbed on Tuesday as investors weighed stronger economic data from China and upbeat corporate earnings in Europe against concerns about a potential second wave of coronavirus infections as economies reopen.

DUBLIN

Euronext Dublin underperformed on Tuesday relative to its European peers, ending the day down 40 basis points, with commercial property companies among those to drag down the index.

Cairn Homes ended the day down 4 per cent, while Glenveagh Properties, Hibernia Reit, and Ires Reit all finished the day down 3 per cent. Property companies across Europe were generally weak.

AIB has endured a volatile few days, and shed 6 per cent of its value after chief executive Colin Hunt signalled he may seek additional savings as analysts see the Covid-19 crisis dragging on the bank's loan book growth and income prospects over the coming years.

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Earlier, the bank revealed it took a €210 million charge in the first quarter for a surge in bad loans due to the coronavirus economic shock. Its closing price represented a 12 per cent swing from an earlier high. Meanwhile, Bank of Ireland finished the day down 70 basis points.

It was a mixed bag for construction companies, with Kingspan losing 3 per cent of its share value, while Grafton Group ended the day up 1 per cent.

Elsewhere, traders said markets responded well to "ambitious plans" by Ryanair to resume 40 per cent of its services from July. The airline finished up 2.5 per cent.

Paddy Power Betfair owner Flutter, meanwhile, lost 1.5 per cent of its share value, while food group Greencore finished the day down 5 per cent after Davy cut its guidance and warned that the coronavirus pandemic could hit its growth model.

LONDON

The FTSE bounced as traders welcomed the government’s plans to extend its furlough scheme.

London’s markets thus stood tall ahead of their European counterparts, which continued to be dogged by fears that a second wave of coronavirus could halt plans to reopen the economy.

The FTSE 100 closed 55.04 points higher at 5,994.77p at the end of trading on Tuesday.

Connor Campbell, financial analyst at Spreadex, said: “There were a couple of major factors at play helping the UK index out.

“The extension of the government’s furlough scheme until the end of October was a clear boost, even if questions remain about companies sharing some of the cost from August onwards.”

EUROPE

Europe’s other key markets were broadly mixed but more muted as dealers wait for more evidence over whether or not infection rates might pick up again.

The German Dax decreased by 0.05 per cent, while the French Cac moved 0.39 per cent lower.

In company news, Vodafone pushed towards the top of the UK's leading index after the company maintained its dividend. The telecoms operator said it bounced back from a multibillion-euro loss to post a profit in its most recent financial year. Shares closed 9.88p higher at 122.88p as a result.

Elsewhere, Morrisons also closed in the green after it posted surging retail sales over a "volatile" first quarter.

The supermarket firm reported a 5.7 per cent rise in group like-for-like sales, excluding fuel, in the 14 weeks to May 10th. It saw shares rise 6.35p to 195.1p at the close of play.

NEW YORK

The S&P 500 struggled for direction as the risks of reopening the economy too soon overshadowed hopes of a jump-start to a battered global economy following an easing of virus-led business shutdowns.

Among the 11 major sectors, financial stocks, which generally lag when the economic outlook dims, weighed the most on the S&P 500.

Also dragging the sector lower was a 5.5 per cent fall in BlackRock after its top shareholder PNC Financial Services Group planned to sell its entire 22 per cent stake in the world's largest asset manager.

Wall Street’s fear gauge slipped for the fourth day running, hitting a 10-week low, even as data showed US consumer prices in April dropped by the most since the Great Recession. (Additional reporting: agencies)