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ISEQ lower as markets pause for breath

Monday, September 17 09:04:29

The ISEQ is lower this morning at 3,294, down 9 points as European markets stop for air following last week's large gains. Davy Stockbrokers has a summary of where we are now following ECB and Fed actions in recent weeks:

European indices rose sharply on Friday (September 14th) following the announcement of the Federal Reserve's QE3 programme late on Thursday. The Euro Stoxx 50 Pr closed up 2pc and the FTSE 100 1.6pc. The S&P 500 rose 0.4pc as retail sales saw a healthy 0.9pc increase in August, and the Michigan measure of consumer confidence rose to its highest level since May.

Over the weekend, the Euro group of finance ministers met in Nicosia. Comments from Irish government ministers and media reports of unnamed government sources suggest that some progress has been made in renegotiating a new funding package for IBRC with the European Central Bank to relieve the government of the E3.1bn funding requirement for promissory notes. There appears to be some expectation that a new deal could be agreed by the end of September.

However, any prospect of ESM capital injections into Irish banks seems unlikely to be agreed by October. Instead, any capital injections will depend on the final package agreed for recapitalising Spain's banks, unlikely to be agreed before the beginning of 2013. Friday's Irish trade data for July saw a rebound in export performance. Following a 6pc rise in nominal goods exports, the goods trade balance expanded to its highest level since November 2011. In Q2 2012, goods exports fell by 5.4pc in nominal terms, a concerning development ahead of Thursday's Irish GDP data for the second quarter.

However, in the three months to July, goods exports rose by 4.3pc. So Friday's trade data for July were reassuring, indicating that any weakness in goods exports in Q2 may be temporary and will bounce back in Q3 according to Davy Stockbrokers