Friday, July 06 17:40:36
The ISEQ closed the week on a major downer as investors fretted over the prospects for Irish and global economic growth following poor jobs data from the US.
The index fell 41.52 points to 3,173.15.
European shares posted their worst one-day fall in around two weeks as persistent concerns over U.S. economic growth and the euro zone debt crisis led investors to sell equities, but not by enough to prevent a fifth week of gains. The FTSEurofirst 300 index provisionally closed down 1 percent at 1,033.99 points - its biggest one-day fall since losing 1.6 percent on June 25. The Euro STOXX 50 index fell 2.1 percent to 2,236.29 points. Weaker-than-expected U.S. jobs growth in June and a rise in Spanish bond yields back above 7 percent weighed on sentiment, with banking stocks the worst hit.
Investors were also disappointed as ECB chairman Mario Draghi dismissed the prospect of buying more distressed sovereign bonds, or lending directly to the euro zone's bailout funds to help support banks and buy debt in the secondary market.
Shares in Irish bookies, Paddy Power, were flat at E53.20. Ladbrokes' trading statement last week was as unwelcome as it was unexpected. The group effectively signalled that its online EBIT margins will be half what they were a year ago, impacted by weak sports results, higher gaming taxes in Spain and Denmark, higher-than-expected (at least to us) operating costs and delays in completion of key technology projects. The latter, management says, has meant that the group has not been able to achieve the improvements in customer yields that it would have hoped.
CRH shares fell 61c to E14.60. The latest figures from the Polish Cement Association show that sales declined in June by almost 20pc year on year (yoy). This is the third consecutive month of decline and leaves first half volumes down 11pc yoy. In the statement at the start of May, CRH management noted that while its Polish cement volumes were impacted by harsh weather in February they had recovered in April to leave the first four months broadly flat. The figures from the Polish Association showed sales down 6pc for Jan- Apr. "While CRH's Polish operations (circa 10pc of group profits) clearly gained share in Jan- Apr the fact that industry sales have continued to decline in May and June is a concern. Indeed, we believe the risk to Polish construction forecasts are on the downside on the back of a hangover from the build-up to the European football championships, especially as we move into H2 and 2013. This was reflected in recent revisions by Euroconstruct who is forecasting output to decline by 2pc in 2013," according to Goodbodys.
One of Grafton's main competitors, Marshalls has reported that first half sales have declined by 5pc. As sales were down 3pc in the first four months this implies a decline of 11pc in May-June reflecting harsh weather. On a sector basis sales to the public and commercial sectors are down 2pc while domestic sales, which were particularly impacted by the poor weather, are down 14pc. The weather has also resulted in an increased backlog with domestic order books now at 9.0 weeks, up from 7.5 weeks at the end of April. Management is cautious on the outlook citing the forecasts of the Construction Products Association who are forecasting UK volumes to decline by 3pc in 2012 and be broadly flat in 2013. Grafton's shares fell 14c to E2.76.