Tracker scandal drags banks and Iseq Index down

Following recent controversy over tracker mortgages, the banks dragged the Irish market down, while US stocks dropped the most in almost 10 weeks as the dollar slumped.

DUBLIN

The Iseq Index finished Wednesday down 0.86 per cent following poor performances by the banks.

Permanent TSB finished the day down 1 per cent, but Bank of Ireland fared worst, down almost 4 per cent.

AIB was down 1.6 per cent following reports that thousands of its fixed-rate mortgage customers have been unfairly excluded from its tracker mortgage redress scheme, contrary to guidelines set out by the Central Bank.

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An analyst with Davy said investors were “worried about the potential for more negative headlines” for the bank. “It hasn’t really come out to speak to the market on the mortgage issue yet, and investors are a bit nervous about the ultimate cost.”

Ryanair finished the day down 1 per cent following reports that its pilots have been directed to take their annual leave for 2018 in the first three months of the year.

“This was following on from all the issues with rostering and pilots and so on,” noted the analyst. “It has results out on Tuesday and investors are nervous about what they will potentially have to say.”

CRH gave up some of the ground it made in recent days following some profit-taking, which brought its share price down 0.6 per cent.

In property, Green Reit was down 2.6 per cent; Hibernia Reit fell 1 per cent; while Ires Reit finished down 1.5 per cent. Elsewhere, Dalata also suffered, finishing the day down 2 per cent.

LONDON

Britain's blue chip index was knocked out to a three-week low when better than expected economic growth triggered a surge in the pound and as shares in heavy-weight GlaxoSmithKline suffered their worst fall in nearly a decade.

The FTSE 100 closed at 7,447.21 points, down 1.05 per cent as the British currency jumped close to 1 per cent. Strong quarterly gross domestic product data bolstered expectations the Bank of England would raise interest rates next week, hitting blue chips, many of which source their revenues overseas.

“Ultimately, a respectable growth rate in the UK economy will assist the equity benchmark in the long run, but for now the pound is putting pressure on it”, wrote David Madden, a market analyst at CMC Markets said in a note to his clients.

GlaxoSmithKline posted its worst performance in nine years, sinking 5.5 per cent as the prospect of the group engaging in a consumer health business deal worth some $15 billion sparked investor fears of a dividend cut.

EUROPE

European shares fell to a near four-week low, with a mixed batch of company results sparking profit-taking a day before the European Central Bank decides on monetary policy.

The pan-European STOXX 600 benchmark declined 0.6 per cent as companies in the region reported mixed results. The French Cac and German Dax closed lower by 0.37 per cent and 0.46 per cent respectively.

The market fall came despite continued strength in economic data, among the key drivers for this year’s stocks rally along with solid corporate earnings growth.

Some fund managers expect the stock market to correct even though the global macroeconomic backdrop is positive. On Wednesday, a survey showed German business confidence surprisingly rose to a record high in October.

NEW YORK

US stocks dropped the most in almost 10 weeks while the dollar slumped following renewed turmoil in Washington over president Donald Trump’s tax overhaul.

The SandP 500 Index fell from near a record high, with weak results hammering shares in Chipotle Mexican Grill and Advanced Micro Devices.

Ten-year Treasury yields narrowed after reaching their highest since March, and gold gained as investors sought havens from slumping equity markets.

The stock market retreat came the day after Republican senators Jeff Flake and Bob Corker publicly criticised Mr Trump as he tries to push through big changes in the US tax code.

(Additional reporting: agencies)